The news: The British pound is performing better than 90% of the globe’s currencies this year, as market participants bet that the UK’s Bank of England will likely hold rates higher for longer than other western nations.
The numbers: Of over 140 global foreign-exchange rates tracked by Bloomberg, only 11 currencies including those of Kenya, Zambia and Sri Lanka, have outperformed the UK sterling this year.
The context: According to analysts, the UK’s economy is proving more resilient than previously thought, which is likely to mean the country’s central bank will delay cutting rates from August, later than the June cuts expected from the US Fed and ECB.
While the UK’s job market also remains robust with wages rising 5.7%, weaker consumer confidence figures for February suggest that some households continue to struggle under the cost of living crisis.
What they said: Athanasios Vamvakidis, head of G-10 currency strategy at Bank of America told Bloomberg: “Last year the UK had the worst growth-inflation mix in major economies. Now, the economy seems to be recovering, while inflation is coming down […] The data mix is getting better, which supports GBP, particularly given a bearish consensus.”
