London Daily

Focus on the big picture.
Saturday, May 31, 2025

Pound reaches high not seen since mid-August

Pound reaches high not seen since mid-August

A weakened dollar has led to a more valuable pound as officials at the US Federal reserve signal support for slowing interest rate rises.
A pound could buy $1.21 on Thursday morning, the highest amount since mid-August, making imports cheaper for UK companies and consumers.

The 20 cents rise in sterling buying power from an all-time low in the days following the September mini-budget and the associated market upset, is due to dollar weakness rather than pound strength.

The three-month high follows news from the US interest rate-setting Federal Reserve, known as the Fed, that the majority of its members wish to slow the pace of interest rate rises.

Rates had been continuously hiked by the Fed in an effort to reduce inflation to its 2% target but US inflation stood at 7.7% in the year up to November.

A stronger pound is good news for businesses and consumers and could help lower inflation as importing goods, such as food and petrol, becomes cheaper.

While sterling held its gains throughout the morning, the pound is still down against the dollar this year. Pound value peaked against the dollar in mid-January this year when £1 bought $1.37.

Higher pound values can also be a measure of economic confidence and financial stability and so the pound dropped in value after the now revoked, mini-budget plan of unfunded tax cuts and spending.

US markets are closed for Thanksgiving so broader market reaction to the Fed's interest rate position is not clear.

Interest rates have been rising across the world as countries grapple with inflation from rising energy costs, caused by Russia's invasion of Ukraine, and supply chain issues stemming from COVID-19 lockdowns.

Similar to the Fed, whose views were known through the release of meeting minutes, the interest rate-setting body for the Eurozone, the European Central Bank (ECB) on Thursday released minutes of its meetings.

But contrary to the Fed, the ECB said it feared that inflation may be getting entrenched, records of their last policy meeting showed. As a result, rates would need to rise further, the accounts of the 26 and 27 October meeting showed.

"It was also clear that rates would need to be raised further to reach a level that would deliver on the ECB's 2% medium-term target," the meeting notes showed.

The pound is at a month-high against the euro and can buy €1.16.
Newsletter

Related Articles

0:00
0:00
Close
Satirical Sketch Sparks Political Spouse Feud in South Korea
Indonesia Quarry Collapse Leaves Multiple Dead and Missing
South Korean Election Video Pulled Amid Misogyny Outcry
Asian Economies Shift Away from US Dollar Amid Trade Tensions
Netflix Investigates Allegations of On-Set Mistreatment in K-Drama Production
US Defence Chief Reaffirms Strong Ties with Singapore Amid Regional Tensions
Vietnam Faces Strategic Dilemma Over China's Mekong River Projects
Malaysia's First AI Preacher Sparks Debate on Islamic Principles
White House Press Secretary Criticizes Harvard Funding, Advocates for Vocational Training
France to Implement Nationwide Smoking Ban in Outdoor Spaces Frequented by Children
Meta and Anduril Collaborate on AI-Driven Military Augmented Reality Systems
Russia's Fossil Fuel Revenues Approach €900 Billion Since Ukraine Invasion
U.S. Justice Department Reduces American Bar Association's Role in Judicial Nominations
U.S. Department of Energy Unveils 'Doudna' Supercomputer to Advance AI Research
U.S. SEC Dismisses Lawsuit Against Binance Amid Regulatory Shift
Alcohol Industry Faces Increased Scrutiny Amid Health Concerns
Italy Faces Population Decline Amid Youth Emigration
U.S. Goods Imports Plunge Nearly 20% Amid Tariff Disruptions
OpenAI Faces Competition from Cheaper AI Rivals
Foreign Tax Provision in U.S. Budget Bill Alarms Investors
Trump Accuses China of Violating Trade Agreement
Gerry Adams Wins Libel Case Against BBC
Russia Accuses Serbia of Supplying Arms to Ukraine
EU Central Bank Pushes to Replace US Dollar with Euro as World’s Main Currency
Chinese Woman Dies After Being Forced to Visit Bank Despite Critical Illness
President Trump Grants Full Pardons to Reality TV Stars Todd and Julie Chrisley
Texas Enacts App Store Accountability Act Mandating Age Verification
U.S. Health Secretary Ends Select COVID-19 Vaccine Recommendations
Vatican Calls for Sustainable Tourism in 2025 Message
Trump Warns Putin Is 'Playing with Fire' Amid Escalating Ukraine Conflict
India and Pakistan Engage Trump-Linked Lobbyists to Influence U.S. Policy
U.S. Halts New Student Visa Interviews Amid Enhanced Security Measures
Trump Administration Cancels $100 Million in Federal Contracts with Harvard
SpaceX Starship Test Flight Ends in Failure, Mars Mission Timeline Uncertain
King Charles Affirms Canadian Sovereignty Amid U.S. Statehood Pressure
Trump Threatens 25% Tariff on iPhones Amid Dispute with Apple CEO
Putin's Helicopter Reportedly Targeted by Ukrainian Drones
Liverpool Car Ramming Incident Leaves Multiple Injured
Australia Faces Immigration Debate Following Labor Party Victory
Iranian Revolutionary Guard Founder Warns Against Trusting Regime in Nuclear Talks
Macron Dismisses Viral Video of Wife's Gesture as Playful Banter
Cleveland Clinic Study Questions Effectiveness of Recent Flu Vaccine
Netanyahu Accuses Starmer of Siding with Hamas
Junior Doctors Threaten Strike Over 4% Pay Offer
Labour MPs Urge Chancellor to Tax Wealthy Over Cutting Welfare
Publication of UK Child Poverty Strategy Delayed Until Autumn
France Detains UK Fishing Vessel Amid Post-Brexit Tensions
Calls Grow to Resume Syrian Asylum Claims in UK
Nigel Farage Pledges to Reinstate Winter Fuel Payments
Boris and Carrie Johnson Welcome Daughter Poppy
×