Pound rises against dollar after hitting lowest point in five months

The pound rallied against the dollar (GBPUSD=X) on Monday, rising around 0.3% in early trade to flirt with the $1.25 mark following fresh data last week which boosted hopes the UK is heading out of a recession.

Last week, sterling dipped as low as $1.24 against the dollar — its lowest price since November, as interest rate cut bets continue to fluctuate.

Data released by the Office for National Statistics on Friday showed that the UK economy grew slightly for the second month in a row in February, boosting hopes that the economy is escaping recession. Gross domestic product (GDP) grew 0.1%.

Meanwhile, the dollar's strength last week came following new US consumer price index data released on Wednesday which came in above forecasts. Headline inflation jumped from 3.2% to 3.5% while core inflation, which was expected to fall, held at 3.8%.

The print resulted in markets dialling back rate cut hopes, the first of which had originally been pencilled in by economists for June.

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Swap markets now price in only one rate cut for 2024 in the US, down from the peak of seven, reached several months ago.

The pound was also up around 0.1% against the Euro (GBPEUR=X) to trade at €1.17.

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