The pound stabilised against the U.S. dollar on Thursday, pausing after its strongest one-day surge since April. The currency had climbed more than 1% on Wednesday following an upward revision to key UK business activity data, offering a more positive view of the economic outlook.
Sterling edged down less than 0.1% to $1.3348, after briefly touching a five-week high of $1.33585 earlier in the session, News.Az reports, citing Reuters.
The S&P Global UK Composite PMI for November—covering both manufacturing and services—was revised higher on Wednesday, helping bolster the pound.
“The growth outlook doesn’t look as muted as it was initially assumed,” said Danske Bank analyst Kirstine Kundby-Nielsen.
Sterling has gained over the past week as anxiety around Finance Minister Rachel Reeves’s long-awaited budget eased. Investors had feared that a combination of tax increases and significant spending commitments could unsettle bond markets.
Instead, UK borrowing costs have moved lower since the budget announcement.
“The Labour government didn’t really stir markets that significantly,” Kundby-Nielsen said. “What we’ve been seeing over the past week is some of that budget risk being priced out.”
Economists say the budget’s measures are unlikely to push inflation higher, clearing the way for the Bank of England to begin cutting interest rates. Markets now price in a 90% probability of a rate cut at the central bank’s meeting later this month.
Against the euro, sterling was little changed at 87.44 pence.
