The GBP/USD pair is situated near a five-month pinnacle.

The British pound, in conjunction with the US dollar, is maintaining its position close to a five-month high. The current exchange rate for GBP/USD is 1.2702.

There is a prevailing belief in the market that the Bank of England will implement interest rate cuts later than the US Federal Reserve. According to the general market projection, interest rates are anticipated to undergo a reduction five times in 2024, with the primary phase of this easing cycle set for the latter part of the year.

Investors are confident that the initial cut will be introduced during the BoE's May meeting.

Despite this optimism in the market, leading investment firms are not as sanguine as the stock markets. Many of them opine that the Bank of England won't decide to lower borrowing costs this year but may signal such a move in the second half.

This conservative stance finds support in inflation data. In November, the UK's Consumer Price Index (CPI) reached 3.9%, the highest among G7 countries.

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