The GBP is up 0.2% against the USD, continuing its rally driven by positive sentiment and stronger-than-expected economic data. The report highlights that market focus is on the upcoming BoE policy decision, with expectations for no change. Political developments pose risks for the Pound as leadership challenges loom. Shaun Osborne and Eric Theoret from Scotiabank note.

GBP strengthens amid positive sentiment

"As with EUR, the GBP’s latest rally looks to have been primarily driven by sentiment, with added support from fundamentals on the back of last Friday’s stronger than expected retail sales and PMI data."

"Political developments remain a major risk for the pound as market participants consider the ongoing threat of a leadership challenge to PM Starmer."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)