Sterling's Resurgence: Analyzing the Pound's Comeback

The pound strengthened on Monday, recovering from an eight-month low due to the dollar's decline against other currencies. Sterling rose to $1.2489 as investors readjusted after holiday trading. The Bank of England expects rate cuts in 2024 amid sluggish UK business activity.

The pound firmed significantly on Monday, pulling away from an eight-month low reached last Thursday as investors reversed some moves initiated during thin holiday trading.

On Monday, Sterling hit a high of $1.2489 and ended the day up 0.37% at $1.247. This marked a recovery from last week's dip to $1.2353, the lowest since April, driven by a dollar rally fueled by expectations of robust U.S. growth and higher tariffs by 2025.

The pound's rise lacked a clear catalyst but coincided with the dollar's fall against currencies like the euro, Swiss franc, and Canadian dollar. According to Mizuho strategist Jordan Rochester, the UK markets face a quiet January until key economic reports later this week.

(With inputs from agencies.)