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The pound has risen above $ 1.30 for the first time since the beginning of November, helped by the persistent inflation of the United Kingdom and a broad weakening in the dollar.
Sterling rose above the level on Tuesday for the first time since the days after the US elections. It has risen about 3 percent so far this month, helped by a decrease in the dollar, since investors concern that the commercial war war of President Donald Trump is harming the economy of the United States.
Sterling’s profits mark a reversal since January, when concerns about the perspectives of the United Kingdom’s public finances knocked down the currency and bonds of the United Kingdom government. Since then, the highest inflation has caused bets that the Bank of England would be slower to reduce interest rates than was previously thought.
“The pound is advanced for the trip, since it has a better support of interest rates … the tax concerns of the United Kingdom are still available, but for now,” said Brad Bechtel, Global Chief of FX in Jefferies.
After reaching a maximum of two years after the US elections, since investors bet that Trump’s tariffs and other economic policies would boost inflation, the dollar has fallen sharply since January as investors focus more on the possible economic damage of the formulation of erratic policies in the White House.
“It sends another reminder that market participants no longer trust that President Trump’s policies will boost the growth of the United States and strengthen the US dollar,” said Lee Hardman, a senior divine analyst of MUFG.
Craig Inches, head of rates and cash at Royal London Asset Management, said the Sterling force was a combination of a “deceleration of the United States, which leads to more fed cuts” compared to an expected increase in the United Kingdom inflation data that will make the BOE reduce the costs of loans. In January, inflation increased more than 3 percent.
The BOE is expected to maintain stable interest rates at 4.5 percent at your meeting on Thursday. The levels in the exchange markets suggest that the merchants believe that the BOE and the Federal Reserve will make two point cuts this year, and the Fed is more likely to be a third.
The ascending movement for Sterling occurs despite the OECD this week reducing its growth forecast for the United Kingdom, since countries around the world are beaten by the consequences of US tariffs. The Paris headquarters now expects the GDP growth of the United Kingdom by 2025 to be 1.4 percent, a reduction of 0.3 percentage points of its previous calculation.
But the pound has resisted commercial concerns this year, since investors bet that the United Kingdom is less exposed to tariffs than to other economies.
Last week, the Prime Minister of the United Kingdom, Sir Keir Starmer, said he was “disappointed” by the last United States tariff save on steel and aluminum, but that the country would maintain “all options on the table” in terms of response to US administration.
