The British pound strengthened toward $1.26 after hitting six-month lows earlier in the month, though investors remain cautious as they evaluate the potential effects of a second Donald Trump administration.
Pound gains ground against dollar
Trump reaffirmed his threats to raise tariffs, including a 10% increase on Chinese goods and a 25% hike on imports from Mexico and Canada. Meanwhile, disappointing economic data from the UK has increased expectations for rate cuts by the Bank of England. Retail sales fell by a larger-than-expected 0.7% in October, and flash PMIs also underperformed, signaling a slight decline in business activity in November.
Eyes on inflation
On the inflation front, the annual rate rose to 2.3% in October, the highest in six months, surpassing both the BoE's target and market expectations of 2.2%. Most analysts anticipate the BoE will keep interest rates unchanged in December.
