Finance
Sterling nudges lower but still near multi-year highs, looking past UK politics
Published by Global Banking & Finance Review®
Posted on July 2, 2025
2 min readLast updated: January 23, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on July 2, 2025
2 min readLast updated: January 23, 2026
Sterling stays near multi-year highs despite UK politics, with focus on Bank of England's policy hints affecting the gilt market.
LONDON (Reuters) -The pound eased a touch against the dollar on Wednesday but held near its near-four-year top hit the previous day, one of the many beneficiaries of the greenback's recent weakness.
Investors by and large looked through political drama in Britain where Prime Minister Kier Starmer suffered the largest parliamentary rebellion of his premiership even as he was forced to back down on key parts of a benefit-cutting package.
Markets this week were more focused on hints from Bank of England governor Andrew Bailey on Tuesday that the central bank could change the BoE's quantitative tightening process - the pace of which, analysts say, has been weighing on longer dated government bonds known as gilts.
"The gilt market did not react negatively to the news from the Commons, at least partly thanks to Bank of England Governor Andrew Bailey hinting at a potentially slowing quantitative tightening to give some relief to back-end liquidity. That may have helped shield sterling, too," said Francesco Pesole, currency analyst at ING, in a note.
Sterling was last down 0.35% on the dollar, largely moving in line with peers, as the dollar's recent decline paused for breath.
The pound hit $1.3787 on Tuesday, its highest since autumn 2021. Other European currencies such as the euro and Swiss franc are also at their strongest in years.
Sterling was also a touch weaker on the euro, which was up 0.15% at 85.98 pence, an over two-month high.
There is little British economic data expected for the rest of the day, though policy maker Alan Taylor will speak at the ECB's central bank conference at Sintra, Portugal.
Taylor voted for a rate cut at the central bank's last meeting in June, when the rate-setting monetary policy committee voted to keep rates steady. Market pricing indicates a good chance of a BoE rate cut at their meeting next month, though it is not yet fully priced in.
(Reporting by Alun JohnEditing by Peter Graff)
Prime Minister Kier Starmer faced the largest parliamentary rebellion of his premiership, but investors largely overlooked this political drama.
Bank of England Governor Andrew Bailey hinted at a potential change in the quantitative tightening process, which contributed to a stable gilt market.
The pound was last down 0.35% against the dollar, after reaching a near four-year high of $1.3787 the previous day.
There is little British economic data expected for the rest of the day, which may influence market reactions.
Other European currencies, including the euro and Swiss franc, are also at their strongest levels in years, reflecting a broader trend in currency strength.
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