The pound has reached a 2-month high

On Wednesday, the British pound reached its highest in eight weeks paired with the US dollar amid declining concerns about the future prospects of the global financial system.

The GBP/USD pair reached 1.2363, the highest level since January 31. The EUR/GBP pair strengthened to 0.8791.

As you know, the pound is very sensitive to risk. And since there was increased volatility in the markets in March after the collapse of Silicon Valley Bank (SVB) and the urgent buyout of Credit Suisse, the popularity of the British currency as a risky asset declined somewhat. 

However, this week the markets breathed a sigh of relief after the bank First Citizens BancShares acquired all the assets of SVB, and the absence of new negative factors restored investor confidence.

Moreover, the governor of the Bank of England, Andrew Bailey, said on Tuesday that the central bank remains vigilant amid the turmoil in the global banking sector, and is not experiencing stress related to the problems of SVB and Credit Suisse.

Last week, the Bank of England raised its key interest rate by 25 basis points, which was the eleventh increase in the current tightening cycle. However, market participants believe that the central bank is close to the end of this cycle.