Pound Edges Higher on Stronger-than-Expected UK GDP Data

The British pound has seen a slight gain to $1.35 as investors weigh the implications of stronger-than-expected UK GDP data ahead of next week's Bank of England policy decision.

According to recent figures, UK GDP grew 0.4% month-on-month in July, exceeding forecasts, while growth over the three months to July also held steady at 0.4%.

Markets are expecting the BoE to leave interest rates unchanged next week, following Governor Andrew Bailey's statement that future decisions will depend on economic and geopolitical developments, contradicting the view that another rate hike is imminent.

Despite this, markets still fully price four BoE rate increases by mid-2027 as concerns over inflation remain elevated due to the recent oil price rally.