One pound now buys more dollars than at any point in almost a year.
Sterling’s value rose against the dollar on Thursday afternoon with a pound equalling $1.29 for the first time since late July 2023.
It’s good news for any Britons travelling to the US – their pound will now go further than it had done in the past 11 and a half months.
Consumers generally may benefit if the rate remains good for sterling, as the price of importing goods bought with dollars could come down.
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If costs remain lower for importers, the savings could be passed on to shoppers.
Goods such as petrol are priced in dollars.
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Why is the pound currently strong against the dollar?
The pound rally followed the latest US inflation data which came in lower than expected.
Prices were rising at a slower pace than expected – at a rate of 3%.
With lower inflation, investors expect there to be interest rate cuts coming.
The odds of a September rate cut were up, according to London Stock Exchange Group data.
Lower US rates and the associated cheaper borrowing in the US tend to weaken the dollar and therefore benefit the pound.
Higher interest rates tend to be supportive of currencies.