FX.co ★ Pound Set for 2% Monthly Gain

As January concluded, the sterling stabilized around $1.38, nearing a four-year peak and marking a 2% increase over the month. This rise was largely propelled by the depreciation of the US dollar, following the Federal Reserve's decision to maintain interest rates and President Donald Trump's comments suggesting an acceptance of a weaker dollar. Federal Reserve Chair Jerome Powell pointed to a "clear improvement" in the US economic outlook and a recovering labor market. However, his remarks did little to strengthen the dollar, which continued to struggle under the weight of ongoing policy uncertainties, such as renewed tariff threats, criticisms of the Fed's independence, and risks associated with government shutdowns.

In the United Kingdom, recent data from the British Retail Consortium (BRC) showed increasing price pressures, heightening concerns about persistent inflation. This situation may restrict the Bank of England's ability to reduce interest rates in the short term. Concurrently, monetary indicators from the Bank of England revealed that both mortgage approvals and consumer credit figures for December fell below expectations.