FX.co ★ Sterling Edges Up on Monday

The British pound strengthened to $1.295, nearing its recent peak of $1.3 from just over four months ago. This upward movement comes on the heels of positive PMI data, which suggested an economic resurgence. The encouraging figures highlighted robust growth in the services sector, particularly fueled by financial and consumer services demand. Consequently, market participants currently assess a 60% likelihood of a quarter-point rate cut by May, compared to prior forecasts of a more accelerated rate cut schedule. HSBC anticipates a more measured approach to rate reductions, projecting that the Bank of England's key rate will reach 3% by the third quarter of 2026. Meanwhile, in the United States, the Federal Reserve has indicated the possibility of two rate cuts before the year's end. Market watchers are now turning their focus to Chancellor Rachel Reeves' forthcoming Spring Statement scheduled for Wednesday.