Sterling Climbs to 12-Week High as UK Economic Sentiment and Investment Revisions Boost Confidence

The currency is on track for an impressive 8% annual gain for 2025. This strength is primarily attributed to improving sentiment towards the UK economy, bolstered by upward revisions to business investment within the latest GDP figures, which showed a 0.1% growth in the July-to-September period.

Additionally, a "relief rally" followed the recent budget announcement, which provided unexpected fiscal headroom. Despite the Bank of England's recent rate cut, policymakers have indicated a high bar for further reductions due to persistent inflation, suggesting a cautious approach.

While sterling also gained against the euro and hovered near a 2008 high versus the yen, the broader currency market saw attention shift to potential Japanese yen intervention.