The GBP/USD pair is striving to break free from a stagnant trend.
The British pound is steadily gaining ground against the US dollar, with the current GBP/USD exchange rate reaching 1.2720.
Yesterday's statistics underscore that business activity in the UK is leading the way in Europe. This serves as a compelling argument for the Bank of England to sustain high interest rates in the country for an extended period.
A case in point is the CIPS UK Composite PMI indicator, amalgamating data from both the manufacturing and non-manufacturing sectors. It rose to 52.5 points in January, marking the highest level in the past seven months. In December, the index stood at 52.1 points, surpassing the forecasted rise to 52.2 points.
The upcoming Bank of England meeting, scheduled for next week, is expected to shed light on the interest rate discussion. The likelihood of no changes remains high. Key factors to watch include the regulator's commentary on inflation, consumer spending, the December dip in retail sales, and global economic prospects.
As long as the BoE keeps interest rates elevated, the pound is likely to maintain its robust position.