The GBPUSD is moving closer to $1.26 after dipping to its lowest point six months earlier this month. Despite this gain, investors are still cautious because of worries about global trade policies and their potential economic impact.
The United States discusses increasing tariffs on countries like China, Mexico, and Canada, creating market uncertainty. This has made investors watchful, as changes in trade policies can affect global economic growth.
Back in the UK, there are signs of economic slowdown. Retail sales fell by 0.7% in October, more than experts had expected. This suggests that people spend less money in stores, which can slow down the economy. Additionally, early reports on business activity, known as flash PMIs, were lower than forecasts in November, indicating a slight decrease in how much businesses are doing.
On a different note, the UK’s annual inflation rate rose to 2.3% in October from 1.7% in September. This is the highest rate in six months and is above the Bank of England’s target and what the market expected. Higher inflation means that prices for goods and services are increasing faster, which can reduce people’s purchasing power.
Because of these mixed signals—slowing retail sales and rising inflation—most experts believe the Bank of England will keep interest rates the same in December. They think the Bank will wait to see how the economy changes before adjusting borrowing costs.