Pound Strengthens to Two-Week High on Energy Costs and Rate Expectations

The British pound has strengthened to its highest level in nearly two weeks, reaching $1.3545 against the dollar on Wednesday.

This rise is attributed to the increasing energy costs and shifting interest-rate expectations, which are driving UK inflation concerns.

Despite this, Bank of England Governor Andrew Bailey rejects the idea of a predetermined plan for rate hikes, stating that he wants to dispel the notion that the central bank has a secret and unconditional plan for where rates are heading.

The market is pricing in at least two interest rate increases by next March, with a 40% chance of a third hike. This is compared to the Federal Reserve's expected two hikes by then.