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02.02.202613:24:51UTC+00Sterling Steadies Below Recent Highs

The British pound has slid to approximately $1.367, moving further away from its peak of $1.3847 in August 2021, which was reached on January 27. This decline comes as investors cautiously await the upcoming decision on monetary policy from the Bank of England (BoE). The consensus among market analysts is that the BoE will maintain interest rates at 3.75 percent this week. Looking forward, forecasts of rate cuts have been moderated, with investors now predicting a less than 50 percent probability of more than one rate reduction this year. This outlook is shaped by strong UK economic data and persistently high inflation, the highest among the G7 nations. Additionally, recent manufacturing PMI figures have indicated the strongest activity since August 2024, supporting a more cautious approach to policy changes. Nonetheless, the pound has been under pressure due to a stronger US dollar, spurred by changes in expectations regarding Federal Reserve leadership and diminished anticipation of US rate cuts.

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