FX.co ★ Sterling Rises for 4th Session

The British pound appreciated to $1.347 on Wednesday, marking its fourth consecutive day of gains—the longest rally since August. This increase is primarily attributed to the weakening of the US dollar, influenced by concerns over a potential government shutdown—the Trump administration's third—which is affecting market sentiment. Domestically, opinions among Bank of England (BoE) officials vary: Catherine Mann expressed concerns about entrenched inflation, as businesses incorporate higher labor costs into pricing. In contrast, Deputy Governor Sarah Breeden advised against maintaining high interest rates for an extended period. In September, the BoE opted to keep interest rates steady, with financial markets anticipating the next rate cut not occurring until 2026. Politically, reports suggest Chancellor Rachel Reeves plans to abolish the two-child benefit cap in the upcoming November budget, which would incur an annual cost of £3.5 billion but is anticipated to significantly reduce child poverty. There is also speculation about potential tax increases, including increased gambling duties. Additionally, fresh data indicates a 0.5% rise in UK house prices in September and a 2.2% increase year-over-year, exceeding market expectations.