The sterling stood unchanged during early trading on Wednesday, keeping the currency on track for a 5% rise against the U.S. dollar for 2023. The British pound was last down 0.06% against the greenback at $1.2716, slightly lower than its four-month high of $1.279 reached in early December.
In contrast, the sterling was down against the euro, which edged 0.22% higher to 86.95 pence. Still, this wasn’t enough to push the British currency off track from rising 3% against the euro for the year. The pound’s rise against other major currencies this year is largely driven by the Bank of England’s tight fiscal policy in an effort to curb inflation.
Currently, investors are betting that the Bank of England (BoE) will take longer to lower interest rates than its counterparts at the US Federal Reserve and the European Central Bank (ECB). Traders expect the BoE to implement a combined 140 basis points of rate cuts in 2024; lower than an expected 160 basis points from the ECB and 150 from the Fed.