The pound has risen sharply against the US dollar, reaching its strongest point in over two years, driven by stronger UK economic growth and anticipated rate cuts from the Federal Reserve.
Sterling peaked at $1.3246, the highest since March 2022. Its rebound from near parity in September 2022 is notable given prior market turmoil.
Federal Reserve signals regarding interest rate cuts contributed significantly to the strengthening of the pound, with Fed Chair Jerome Powell indicating a shift in monetary policy.
As the Federal Reserve prepares to loosen its monetary policy, currencies typically see a depreciation when monetary policy is easing, impacting investor sentiment.
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