Sterling edged higher on Thursday after survey data showed British businesses recorded their strongest month in a year, driven by a rebound in the services sector, while investors awaited the Federal Reserve's Jackson Hole symposium. The pound gained 0.2 per cent against the dollar to $1.3483 and was slightly firmer versus the euro at 86.57 pence. The move followed a hot inflation reading on Wednesday that offered only brief support for sterling, with analysts noting the upside was largely due to higher airfares rather than broad-based pressures. Markets are pricing less than a 50 per cent chance of a Bank of England rate cut before the end of 2025, with easing fully priced in by March 2026. The two-year gilt yield rose 6 basis points to 3.97 per cent, reversing a drop the previous day. Sterling remains a leading carry trade option among G10 currencies, comparable to the high-yielding US dollar, UBS said, reiterating a year-end GBP/USD target of 1.39. The pound has gained nearly 8 per cent against the dollar in 2025. Attention now turns to Fed Chair Jerome Powell's speech at Jackson Hole on Friday, amid renewed concerns over President Donald Trump's attempts to influence the central bank. The dollar index was little changed at 98.2. Attribution: Reuters Subediting: M. S. Salama
