(Reuters) – The pound oscillated near a 13-month high against the dollar on Friday, trading just below levels reached in April 2022, as traders awaited key speeches from the heads of the Federal Reserve and the Bank of England.
The pound rose 0.2% to $1.3116, building on gains earlier this week that took it to its highest level since July 2023. It looked set for a weekly rise of 1.5%.
The pound has been one of the best-performing major currencies this year, gaining momentum in August after a series of stronger-than-expected economic data coincided with growing speculation about interest rate cuts in the US.
Latest figures show that UK consumer confidence remained at a nearly three-year high in August. A survey on Thursday showed that UK business activity increased in August and cost pressures eased to their lowest level in over three years.
Traders are awaiting Fed Chairman Jerome Powell’s speech at the Jackson Hole research conference later in the day for clues about the extent of the Federal Reserve’s interest rate cuts this year.
Signs of a slowdown in US economic growth have fuelled speculation about a series of interest rate cuts this year and hurt the dollar in recent weeks. Traders are pricing in US interest rate cuts of around 100 basis points by the end of 2024.
Bank of England Governor Andrew Bailey is also expected to speak at the symposium at 19:00 GMT.
“We believe he could emulate Powell’s approach and say as little as possible,” said ING currency strategist Francesco Pesole.
“Bailey does not have to deal with an aggressively dovish pricing policy (-39 basis points by year-end), but the UK still needs to gain much more confidence on inflation.”
A majority of economists in a Reuters poll said the Bank of England would cut interest rates only once more this year, in November, as inflation is expected to remain above target. Market prices show traders have priced in cuts of around 42 basis points by December.
The euro/pound exchange rate fell to a three-week low, trading 0.1 percent lower at 84.78 pence per euro.
(Reporting by Sruthi Shankar in Bengaluru; Editing by Andrew Heavens)
