Anna 
In Monday’s European session, the Pound Sterling (GBP) exhibits strength, buoyed by expectations that the Bank of England (BoE) will keep interest rates unchanged for an extended period. Persistent price pressures in the UK economy, fueled by resilient service inflation, consistent labor demand, and robust household spending, contribute to the anticipation of a prolonged hawkish stance by BoE policymakers.
Last week’s surprisingly positive UK Retail Sales data suggests that the impact of the BoE’s higher interest rates on consumer spending is diminishing. This optimistic sign indicates a potential earlier exit from the technical recession for the UK economy than previously anticipated. The technical recession was triggered in the latter half of 2023 as the BoE maintained elevated interest rates to curb high inflation, significantly affecting consumer spending and business operations.
The GBP/USD pair experiences an uptick, a trend often seen when the Pound Sterling attracts increased foreign inflows amid an extended hawkish stance by the BoE. Moving forward, market dynamics for the Pound Sterling and the US Dollar will be influenced by the preliminary S&P Global Manufacturing PMI for February.
