The British pound traded above $1.365, hovering near its strongest level since early July, supported by a weaker US dollar and signs of accelerating price pressures in the UK. Data from the British Retail Consortium showed shop prices rose 1.5% year on year in January, the sharpest increase since February 2024 and well above market expectations of 0.7%, reviving concerns over persistent price pressures and potentially limiting the scope for the Bank of England to cut interest rates in the coming months. Meanwhile, broader market sentiment remained cautious as US President Donald Trump threatened higher tariffs on South Korean goods, following similar warnings to Canada and Europe. Investors are also looking ahead to the US Federal Reserve’s policy decision on Wednesday, with rates expected to stay unchanged and speculation mounting that a more dovish successor to Fed Chair Jerome Powell could be announced this week.
