The British pound rose in European trading on Thursday against a basket of global currencies, extending its gains for the second consecutive session against the US dollar and reaching its highest level in a week, supported by the continued decline of the American currency in the foreign exchange market.

Following strong UK wage data, doubts increased over the likelihood of the Bank of England cutting interest rates in November. To reassess these expectations, investors are now awaiting the release of the latest British GDP figures later today.

Price Overview

The GBP/USD exchange rate rose by 0.3% to 1.3442 dollars the highest since October 7 from an opening level of 1.3401 dollars, after touching a low of 1.3392 dollars.

The pound gained 0.6% against the dollar on Wednesday, marking its first daily increase in three sessions, supported by weakness in the US currency.

US Dollar

The US Dollar Index fell by 0.25% on Thursday, extending its losses for the third consecutive session and reaching a near two-week low of 98.42 points, reflecting continued declines in the greenback against both major and minor currencies.

The decline came as investors assessed the latest trade tensions between the United States and China, which, if they escalate, could spark a new trade war between the worlds two largest economies.

Senior US officials including Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer criticized Chinas expanded controls on rare earth exports, calling them a threat to global supply chains.

Chinas Ministry of Commerce defended its export restrictions, pointing to US measures against Chinese goods and companies, and described Washingtons criticism as hypocritical.

UK Interest Rates

Data released earlier this week showed that average wages in the United Kingdom rose in August at the fastest pace in three months, adding inflationary pressure on the Bank of Englands monetary policymakers.

Market pricing currently reflects around a 50% probability of a 25-basis-point rate cut by the Bank of England in November.

UK Economic Growth

To reassess those expectations, investors are awaiting key data from London later today on the UKs GDP growth for August, along with additional figures on manufacturing output.

Pound Outlook

At Economies.com, we expect that if the upcoming data are stronger than market forecasts, the likelihood of a November rate cut will decline leading to further gains in the British pound.