Last autumn saw a record low for the British pound as investors rebelled against budget plans proposed by former Prime Minister Liz Truss. However, the currency has since made a comeback, hitting its highest level against the US dollar in 10 months and becoming the best-performing currency among developed economies this year, having advanced by about 3.3% versus the greenback since the start of 2023.
This success can be attributed to indications that the UK economy is performing better than anticipated, with GDP growth in January estimated at 0.3% after a 0.5% drop in December, and inflation rising to an annual rate of 10.4% in February. The Bank of England's aggressive interest rate hikes, despite concerns about the global banking sector, are also boosting the currency by attracting foreign investors seeking higher returns. However, the pound's success should be taken with a grain of salt, as currency fluctuations are often exaggerated in volatile markets, as we are currently experiencing.
Risk Disclaimer: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 87.49% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
