The pound made slight gains against the dollar on Monday, poised for its fifth consecutive daily increase, marking its lengthiest unbroken surge so far this year.
However, market volatility remained low as investors paused amid a flurry of significant economic data and earnings reports.
Sterling saw a marginal uptick of 0.1% to $1.26855, reflecting a weekly gain of 0.7%. Conversely, it dipped 0.1% against the euro to hover around 85.48.
Last week, the pound achieved its most substantial weekly advance against the dollar this year.
This surge was fuelled by a surge in risk appetite following impressive results from chipmaker Nvidia (NVDA.O) and encouraging business activity surveys, propelling several stock markets to new all-time highs.
Despite several major data releases scheduled this week from the United States, the eurozone, and Japan, there’s a notable absence of significant UK data.
This could likely maintain stability for the pound in the near term, according to DailyFX strategist Richard Snow.
He remarked, “Sterling has performed well over the last week and with little to no ‘high impact’ data on the horizon, the currency may remain propped up on the whole.”
The pound appeared set for its fifth consecutive daily gain against the dollar, its lengthiest winning streak since late December.
In the futures market, traders widely anticipate the Bank of England (BoE) to implement rate cuts, with August being the most probable timing, and a slimmer chance of a cut in June.
Investors are banking on the BoE to slash rates by approximately 60 basis points to slightly below 4.60% by December, which is less than half of the 120 bps in cuts priced in at the beginning of the month.
Looking ahead, next week heralds the Spring Budget from finance minister Jeremy Hunt. Economists and analysts suggest limited scope for fiscal loosening, especially with a general election slated for later in the year.
Nomura economists indicated in a note last week that “A modest rearranging of the fiscal deck chairs is likely to be the Chancellor’s most effective plan for Budget 2024, alongside a modest support package.”