British pound is beating 92% of global currencies on UK economic rebound
sterling in 2024, according to a universe of more than 140 global foreign-exchange rates tracked by Bloomberg. The reason is simple, according to analysts: Britain’s economy is looking more resilient than feared. That’s set to encourage the UK to keep interest rates at their current levels for longer than many of its largest counterparts, including the US Federal Reserve and European Central Bank.
While the Fed and ECB are seen cutting in June, traders only expect the Bank of England to begin easing in August. “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," said Athanasios Vamvakidis, head of G-10 currency strategy at Bank of America, who sees the pound rising to $1.37 by year-end.
“The data mix is getting better, which supports GBP, particularly given a bearish consensus." The pound rose to around $1.29 last week, its highest level in seven months, recording its best week since November versus the dollar. Data in coming days could help reinforce those gains and bolster the narrative that the UK economy is making a comeback. Average weekly earnings are forecast to show the job market in the UK remains robust, with wages rising 5.7%.
Monthly gross domestic product data will likely show the economy growing again in January after a mild contraction in December, while industrial production is set to post a 0.7% annual advance, a slightly faster pace than the month prior. The UK avoided the sharp downturn that many had predicted for 2023, but aggressive interest rate hikes that took the key rate to 5.25% still left the economy stagnating. Consumers came under immense pressure as the cost of food, energy and mortgage payments all
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