FX.co ★ Sterling Climbs Toward 3-Year High

The British pound climbed to $1.353, approaching a three-year peak, aided by a decline in the US dollar following weaker-than-anticipated US inflation data for May. The data alleviated fears that recent tariffs had significantly driven up prices, thus reducing the pressure on the Federal Reserve to increase interest rates. In the United Kingdom, Chancellor Rachel Reeves unveiled a multi-year spending review, detailing £2 trillion in public expenditures with an annual increment of 2.3% in departmental budgets, adjusted for inflation. This plan indicates support for critical sectors, yet analysts pointed out that it confirms limited fiscal flexibility, which may result in tax increases later this year. Additionally, the pound gained support from expectations that the Bank of England will maintain current interest rates in the coming week, despite mixed economic indicators like declining wage growth and rising unemployment. Concurrently, the global risk sentiment improved as the US and China reached a preliminary trade agreement in London.