The British Pound climbed above $1.24 after better-than-expected economic data for January signaled resilience in the UK economy.
Pound extends gains after PMI data
The Services PMI edged higher, and the Manufacturing PMI also improved, with both indicators surpassing market forecasts. However, underlying concerns remain. New business orders saw a steep decline, and employment fell for the fourth consecutive month, weighed down by rising costs. Input prices also increased, raising the risk of further inflationary pressures. With tax and wage hikes set to take effect in April, businesses are bracing for additional cost challenges.
BoE may cut rate again
Despite these headwinds, the Bank of England is expected to proceed with a 25 basis point interest rate cut in February, but the latest data suggests it is unlikely to accelerate the pace of monetary easing.
Meanwhile, the US dollar faced downward pressure after President Donald Trump called for lower interest rates and crude oil prices, adding to uncertainty in global currency markets. This divergence in monetary and fiscal signals has further bolstered the Pound’s position against the dollar.
