Pound Sterling (GBPUSD) extends gains further above $1.25 and is climbing for the first time since last Friday. It's been battered all week by concerns that the Bank of England is falling behind in its fight against inflation. Over the past three months, Pound Sterling has outperformed other G10 currencies, including the U.S. Dollar, amidst expectations for further Bank of England interest rates amidst robust UK economic activity.

According to Bloomberg, on the subject of inflation, Chancellor Jeremy Hunt weighed in with some fascinating comments last night, telling Sky News that a recession was a price worth paying to bring down inflation. Furthermore, while asked whether he was “comfortable with the Bank of England doing whatever it takes to bring down inflation, even if that potentially would precipitate a recession”, he said: “Yes, because in the end, inflation is a source of instability.

However, some large bank analysts’ are still bearish on GBP. For example, FX strategists at J.P. Morgan in London, rate the Pound as overvalued based on no less than three various bank's models even after the near-2.0% decline recorded in May. We think, that given very hopeful inflation report, that stand out from similar EU’s data, GBP still has room to appreciate, but a lot depend on the outcome of the U.S. debt ceiling increase voting.