GBP/USD Surges to 2-Week High Amid Reassessments of BoE Policy
The GBP/USD currency pair rose to its highest level in two weeks on Thursday, reaching 1.3552. The British pound strengthened despite a rise in oil prices above $100 per barrel and heightened Middle East tensions.
The main driver of the sterling's support remains the market's reassessment of the Bank of England's monetary policy outlook. Investors do not expect interest rate hikes at the next meeting, but they are pricing in at least two rate increases by March next year, with a 40% probability of a third increase.
The UK inflation backdrop is also supporting expectations of tighter monetary policy, with consumer price inflation accelerating to 2.9% in July from 2.6% the previous month. However, Bank of England Governor Andrew Bailey has stressed that further monetary tightening is not guaranteed, citing elevated oil prices and fiscal risks ahead of the autumn Budget.