The British pound has made some recovery, approaching $1.26 after hitting six-month lows earlier in the month.
UK pound recoveries against dollar
However, investors remain cautious as they evaluate the potential consequences of a possible second Donald Trump administration. Trump has reiterated his threats to raise tariffs, suggesting a 10% increase on China and a 25% hike on Mexico and Canada. Meanwhile, disappointing economic data from the UK has heightened expectations for Bank of England rate cuts. Retail sales fell by a larger-than-expected 0.7% in October, and flash PMIs came in below forecasts, signaling a slight decline in business activity in November.
What to expect from BoE
On the inflation front, the annual rate rose to 2.3% in October, its highest level 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 Bank of England to keep interest rates unchanged in December.
