The pound strengthened on Monday, recovering from an eight-month low hit last Thursday, as investors reversed some of the moves seen during the restricted trading period over the holiday period.
The British pound rose as high as $1.2489 and was up 0.37% at $1.247. It fell to $1.2353 last week, its lowest level since April, as the dollar rallied on expectations of strong U.S. growth and higher tariffs in 2025.
There was no obvious catalyst for the pound’s recovery, although the dollar fell against a range of currencies including the euro, Swiss franc and Canadian dollar.
“It’s a quiet start to January for the UK until the British Retail Consortium sales (data) tomorrow and the Confederation of Recruitment and Employment jobs report and panel survey BoE policymakers, both on Thursday,” said Jordan Rochester, currency strategist at Japanese bank Mizuho.
The dollar rallied in late December and early January against a range of currencies, pushing the pound to its lowest level in months.
-The United States is expected to grow significantly faster than other economies, including the United Kingdom, next year, while President-elect Donald Trump’s tariff policies could be inflationary, reducing room for maneuver for Fed cuts and supporting the dollar.
The pound sterling remained stable against the euro on Monday, with one euro trading at 82.96 pence.
On Monday, traders expected the Bank of England to cut interest rates by around 55 basis points (bps) this year, about 5 bps less than at the end of last week. The BoE cut rates by 50 basis points to 4.75% in 2024.
Survey data showed on Monday that growth in British business activity slowed in December and employers cut staff at the fastest pace in almost four years, as business morale continues to rise. collapse after the government budget.
