We are now in the midst of a classic sterling rally. Sterling has risen on nine of the past ten days, including three big gains in a row.
The election uncertainty has dissipated and Starmer has not promised to raise taxes, so the market is happy to invest in a place with some political stability in a world of turmoil. The biggest factor is likely to be recent comments from the Bank of England which continue to highlight its belief that the UK’s inflation dynamics are different and the chances of interest rate cuts are lower.
With some broader weakness in the US dollar, the pair hit an 11-month high.
We are still a long way from the old magnet level of 1.60 but there is still some room to advance above last year’s high of 1.3124.
Last week, I spoke with BNNBloomberg and made my case for buying the British pound.
This article was written by Adam Bouton on www.forexlive.com.