Pound Holds Steady as Softer US Inflation Revives Rate-Cut Hopes

The British pound traded steadily against the US dollar on Thursday after fresh inflation data from the United States strengthened expectations that borrowing costs could start to fall later this year.


US consumer price growth slowed more than expected in January, reinforcing signs that inflationary pressures are easing. The data supported market confidence that the Federal Reserve may have room to begin lowering interest rates if the disinflation trend continues in the coming months.


Despite the cooling inflation picture, the US labor market has remained resilient, leaving policymakers cautious about moving too quickly. Still, the latest figures revived expectations that the first rate cut could arrive as early as mid-year, limiting further gains for the dollar and helping stabilize sterling.


In the UK, the pound found support even as domestic economic signals remained mixed. Recent growth figures pointed to a sluggish economy, while investors increasingly expect the Bank of England to ease policy later this year as inflation pressures gradually fade.


Political uncertainty also lingered in the background following renewed scrutiny surrounding Prime Minister Keir Starmer. However, signs of unity within the government helped calm investor concerns, preventing additional pressure on the currency.


Attention will turn to upcoming UK economic releases, including employment, inflation, and retail sales data, which could shape expectations for future policy moves. In the United States, markets will focus on further economic indicators and comments from policymakers for clues on the timing and pace of interest rate cuts.

For now, the pound remains resilient, supported by a softer inflation outlook in the US and cautious optimism that global monetary conditions may gradually ease.