The pound hit a fresh 29-month high against the dollar on the back of hopes of an outsized interest rate cut in the US economy next month.
Sterling gained 0.25 per cent on Tuesday to $1.323, the strongest since March 2022 after Jerome Powell, Federal Reserve chairman, last week confirmed that the “time has come” for monetary easing in the world’s largest economy.
In contrast, Andrew Bailey, governor of the Bank of England, did not hint at the need for another rate cut in the UK during the annual Jackson Hole symposium.
Traders have ramped up bets on the Fed carrying out a 50 basis-point cut to borrowing costs next month, which would mark the first monetary loosening since the pandemic. Lower interest rates