The Pound climbed on Wednesday, strengthening against the Dollar, Euro, and Yen as investors looked ahead to economic growth figures due later this week, which could influence expectations for Bank of England monetary policy in the months ahead.

Sterling rose 0.2% to $1.3447. While it has made little progress against the Dollar so far in January, it has advanced against the Euro, which has fallen 0.7% over the course of the month.

Geopolitical strains involving Iran and Greenland, together with US President Donald Trump’s renewed criticism of the Federal Reserve’s independence, have made investors more wary of the Dollar over the past week.

So far in 2026, investors have taken a more positive view on the Pound. Weekly data from the US regulator show that in the first week of January they reduced their bearish bets on Sterling by the largest amount in five months.

Speculators are now holding a net long Dollar position, betting the US currency will strengthen against the Pound, valued at just $2.577 billion, down from $6.586 billion at the end of December.

The December figure was the largest such position since September 2019.

UK inflation eased faster than anticipated toward the end of 2025, while economic growth continues to be weak.

Markets are pricing in only two interest-rate cuts from the Bank of England this year, a view Morgan Stanley analysts describe as too optimistic, warning that softer growth and inflation data could weigh on the Pound.

“Soft UK employment and CPI for December would be key catalysts for markets to reprice for a February BoE rate cut, compared to almost nothing ‍priced currently,” they stated.

Consumer price figures are due next week, alongside monthly employment data, while GDP numbers are scheduled for release on Thursday.

Economists surveyed by Reuters news agency expect the UK economy to have shrunk by 0.2% in the three months to November, bringing annual growth to 1.1%.