Pound Reaches Four-Year High Amid Dollar Weakness

The pound climbed to a four-year high against the dollar last Thursday, primarily due to the dollar's own declining strength, as noted by Rabobank analysts. While sterling also maintained stability against the euro at 85.24 pence, the focus remained on its performance against the greenback.

This week, the pound gained 2.2% against the dollar, marking its strongest surge since early March. The boost came as the dollar's temporary rise during the Israel-Iran conflict subsided. A major domestic bolster for the pound has been the Bank of England's hesitancy to cut interest rates despite persistent inflation.

Concerning economic trends, Michael Pfister of Commerzbank pointed out the stagnation of core inflation in the UK, complicating rate cut decisions. Additionally, UK Prime Minister Keir Starmer's recent political maneuvers, including a reversal on welfare cuts due to internal opposition, have drawn attention to the country's economic challenges, including a high debt-to-GDP ratio and a current account deficit.

(With inputs from agencies.)