The British pound sterling, paired with the US dollar, hovers near a five-month peak. The current GBPUSD exchange rate stands at 1.2754.
Previously released statistics confirmed that economic growth in the UK surpassed expectations in November. At the same time, it remained subdued over the last quarter.
In November, the UK's GDP rose by 0.3% y/y, exceeding forecasts. However, the production volume dropped by 0.2% over the three months ending in November.
Over the past months, the pound has held a prominent position, benefiting from the consistently higher inflation in the UK compared to the US and Europe. This reinforces the notion that there is no reason to anticipate an imminent interest rate decrease from the Bank of England. This same factor stabilised the yield of UK bonds, making the pound more attractive for investors.
Market participants expect a 125-basis point reduction in the Bank of England's interest rate this year.