The British pound has experienced an increase against the US dollar, fueled by expectations that the Federal Reserve might reduce interest rates in the first half of the year due to decreasing inflation.
The pound advanced by 0.2% to approximately $1.27 following the release of the personal consumption expenditures (PCE) price index. This index, which is the Fed’s preferred measure of inflation, rose by 2.4% in January. This figure aligns with forecasts and is a decrease from the 2.6% recorded in December.
Despite this rise, the pound is on track for a slight monthly decrease when compared to both the dollar and the euro.
Peter Andersen, the founder of Andersen Capital Management in Boston, commented on the US data, suggesting it should increase investor confidence about the economy’s robustness. He praised the Federal Reserve’s efforts in managing inflation, indicating that a ‘soft landing’ for the economy is either currently happening or imminent.
Lee Hardman, a senior FX strategist at MUFG, noted, “The pound has been stabilizing at higher levels this month after its January gains.”
