Sterling hits three-month high against US dollar

Sterling has reached a three-month high against the US dollar, trading above 1.3550. The currency's recent gains are supported by resilient UK economic growth and high yields, even as investors navigate political transitions and energy price volatility.

Market attention is now focused on upcoming UK inflation and labor market data. These reports will be critical for the Bank of England’s interest rate outlook, as traders weigh whether wage growth and inflation levels will necessitate further rate hikes. While recent GDP data showed unexpected growth, some surveys indicate that business confidence remains low and employers are hesitant to hire.

Simultaneously, the US dollar has faced pressure due to moderating inflation and weakening retail sales, leading to reduced speculation regarding imminent Federal Reserve rate hikes.