The British pound strengthened to near $1.26 after hitting six-month lows earlier in the month, though investors remain cautious as they assess the potential impact of a second Donald Trump administration.
Sterling gains ground on Thursday
Trump reiterated his threats to raise tariffs, including a 10% increase on China and a 25% hike on Mexico and Canada. Meanwhile, disappointing economic data from the UK increased expectations of potential rate cuts by the Bank of England. Retail sales dropped by a larger-than-expected 0.7% in October, and flash PMIs fell short of forecasts, indicating a slight decline in business activity in November.
Inflation accelerates
On the inflation front, the annual rate rose to 2.3% in October, the highest in six months, up from 1.7% in September, surpassing both the BoE’s target and market expectations of 2.2%. Most analysts expect the BoE to keep borrowing costs unchanged in December.
