Pound Surges to Near 11-Month High Amid BoE Rate-Hike Bets
The British pound has surged to its highest level in nearly 11 months, reaching 1.3552 on Thursday. This increase comes despite rising oil prices and escalating Middle East tensions. The pound's strength is attributed to shifting expectations of Bank of England policy, with markets now pricing in at least two rate hikes by March next year.
The Bank of England has sought to temper these aggressive expectations, with Governor Andrew Bailey indicating that further tightening is not assured. However, UK inflation has added pressure on the economy, rising to 2.9% in July from 2.6%. Higher oil and gas costs are also increasing pressure on an economy reliant on imported energy.
The technical outlook suggests that the pound may face resistance at 1.3566, but could extend to 1.3572 if it breaks higher. On the other hand, a drop below the current range may target 1.3527 and further weakness could expose 1.3452.