British Pound Outperforms 92% of Global Currencies Amid UK Economic Recovery

46

The British pound has surged ahead of over 90% of the world’s currencies this year, indicating signs of a stronger-than-expected economy in the UK, thus keeping interest rates higher for an extended period.

Data from Bloomberg reveals that only 11 currencies, including those of Kenya, Zambia, and Sri Lanka, have surpassed the sterling in 2024 among a selection of more than 140 global foreign-exchange rates.

Analysts attribute this outperformance to the resilience of Britain’s economy, which is expected to prompt the UK to maintain current interest rates for longer compared to major counterparts like the US Federal Reserve and European Central Bank.While the Fed and ECB are anticipated to reduce rates in June, market sentiment suggests that the Bank of England will commence easing only in August.Athanasios Vamvakidis, head of G-10 currency strategy at Bank of America, notes the improvement in the UK’s economic outlook, anticipating the pound to reach $1.37 by year-end. He highlights the strengthening economy and decreasing inflation as key factors bolstering the pound, particularly in light of a bearish consensus.

Kathleen Brooks, research director at XTB, sees the pound’s rally as a sign of confidence in the UK following challenging years. She notes the positive shift from previous uncertainties, emphasizing the recent strengthening of the pound amidst ongoing economic recovery.