Pound Steadies Despite Stronger Dollar

The British pound maintained its strength against a broadly robust dollar on Tuesday, hovering near a three-year high achieved on the previous day. This stability comes as reduced expectations for Bank of England rate cuts and promising economic data supported market sentiment.

Despite the dollar gaining strength due to U.S. President Donald Trump's trade policy decisions, the pound has risen over 8% against the dollar in 2025. Michael Brown, a senior research strategist, noted that while the pound's rise is partly due to dollar weakness, it is also driven by unique factors, such as a hawkish Bank of England policy and stronger-than-expected UK inflation.

Market sentiment shifted away from expecting a rate cut in June, as 93.6% of traders now predict the BoE will maintain the rate. Positive UK economic data, including a retail sales surge in April, further supports the pound's outlook. The pound also gained 0.27% against the euro, marking its seventh consecutive week of gains.

(With inputs from agencies.)