The pound sterling witnessed an increase against the US dollar in early trading today by 0.28% due to the Bank of England and the future of interest rates in the United Kingdom, coinciding with the Federal Reserve approaching its exit from tight monetary policy.

Inflation in the United Kingdom declined last November, but it is still far from the Bank of England’s target, as the current reading of the Consumer Price Index is at 3.9%, and the rate to be reached is centered around 2.0%. Therefore, expectations indicate that the Bank of England will not be able to begin reducing interest rates Early next year as the Federal Reserve and European Central Bank.

As the Bank of England had said after its last meeting in 2023: interest rates must be “constrained” enough for a long enough period to curb inflation, in addition, the Monetary Policy Committee of the Bank of England has directed that it may raise interest rates once again. Another is if there is evidence of the emergence of more persistent inflationary pressures, especially in light of price growth remaining more than double the target of 2% in the medium term.

As for the US dollar, it declined with increasing expectations of lowering interest rates, especially after the US Central Bank’s surprise announcement during its December meeting of a shift towards a monetary easing policy.

Regarding the technical indicators, the Relative Strength Index is moving above the 50 level at 55, and the MACD is above the zero levels, with the possibility of a positive intersection occurring within the four-hour analysis period.

*All data provided is intended for educational or informational purposes only and should not be considered investment advice.