The British pound held steady at $1.262, remaining near its lowest level since mid-May, as the dollar strengthened following Donald Trump's victory in the US presidential election.
UK pound steady against dollar
Investors anticipated that Trump's policies, including trade tariffs and tax cuts, would boost growth and inflation, potentially reducing the need for Federal Reserve interest rate cuts. Although the pound has fallen 2.7% since the election, it has outperformed the euro, which could be more impacted by tariffs targeting China, the EU, and Mexico. On the monetary policy front, traders see an 80% chance of another rate cut by the Bank of England next month, with rates expected to dip just above 4% by the end of 2025.
UK economy contracted in September
Data released Friday showed the UK economy contracted unexpectedly in September, with growth slowing to just 0.1% in the third quarter. Investors are now focused on October inflation, forecasted at 2.2%, and are anticipating a decline in retail sales after three months of growth.
