GBP/USD Rallies on Healey's Fiscal Discipline Pledge
The British pound is rising against the US dollar as investors react to UK Finance Minister John Healey's pledge for fiscal discipline, which has helped restore the country's credibility in the international bond market.
The 10-year gilt yield has stabilized around 5.15% after reaching its highest level since 2008 last week due to renewed inflation concerns and uncertainty over Prime Minister Andy Burnham's spending plans.
The UK economy is showing signs of recovery, with UK firms increasing full-time hiring in August for the first time in four years. However, the Bank of England (BoE) is not expected to hike interest rates next week, but the market still sees a rate hike taking place before the end of the year.
The US dollar is easing ahead of this week's CPI figures, which will be closely watched for signs of inflation. A higher-than-expected reading could cement expectations that the Fed will hike rates by 25 basis points next week, boosting the dollar and potentially weighing on GBP/USD.