FX.co ★ Sterling Holds Near Six-Week High

The British pound steadied at approximately $1.33 following its recent surge, maintaining proximity to the six-week high of $1.339 reached last Thursday. This pause comes as investors take time to evaluate the monetary policy directions from both the Bank of England (BoE) and the Federal Reserve. Last week's boost for the pound was bolstered by positive reception to Finance Minister Reeves' budget, which was more favorably received than anticipated, and an upward revision of the UK's November Services PMI. Looking forward, the market's anticipation for next week’s Bank of England rate decision remains largely unchanged, with an approximately 84% likelihood of a rate cut factored in, despite indications of rising wage growth. Additionally, market projections suggest a nearly complete pricing of another 25-basis-point rate cut by June, with a roughly 75% chance of this happening by April. In the United States, the Federal Reserve is anticipated to implement a 25-basis-point rate cut on Wednesday, although attention will be focused on the updated projections from the Federal Open Market Committee amidst ongoing uncertainty regarding the policy trajectory for 2026.