The British pound sterling, paired with the US dollar, is holding in close proximity to the five-month peak. The current GBPUSD exchange rate stands at 1.2702.
The market is confident that the Bank of England will initiate the interest rate-cut phase later than the US Federal Reserve. The baseline market forecast suggests that interest rates will be lowered five times in 2024. The main phase of this easing cycle will occur in the year's second half.
Investors are convinced the first cut will be introduced at the BoE's May meeting.
However, leading investment houses are not as optimistic as the stock exchanges. Many believe that the Bank of England will not decide to reduce the cost of borrowing this year but will provide some signals towards it in the second half of the year.
The conservative theory is supported by inflation. In November, the UK's Consumer Price Index (CPI) reached 3.9%, the highest value among the G7 countries.