Company: FXB
Filing Date: 2025-02-26
Form Type: 10-K
Source: 0000950170-25-027271
Chunk: 65

Company: Invesco CurrencyShares British Pound Sterling Trust
Filing Date: 2025-02-26
Form: 10-K
Item: Item 7
Chunk 65
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) ended 2023 in positive territory. While in the first quarter, the sterling was largely driven by US dollar moves, the Bank of England’s aggressive rate hikes to tame stubborn domestic inflation helped the pair rally significantly through March onwards. The USD fell in early-March through early May on expectations for a dovish Fed pivot, especially in the midst of the banking sector turmoil and contagion fears. However, the dollar rebounded in May as the Fed signaled that there was potential for more interest rate hikes before year-end. The sterling spiked again in June as the hawkish BoE returned to center stage and the dollar retreated. While the pair was heavily pressured in the third quarter as recession concerns grew in the UK leading the BoE to pause its tightening while the Fed maintained its higher-for-longer narrative, the pair recovered sharply in the fourth quarter on renewed dollar weakness as rate cut expectations in the US became more concrete.

Additionally, the interest rate paid by the Depository has generally trended downward over the past year to thecurrent interest rate of 3.26%, as set forth in the FXB Rate Chart above. As long as the Sponsor’s fee and the interest expense on currency deposits, if any, exceed interest income, the Trust will incur a net comprehensive loss.

 Critical Accounting Estimates 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the Sponsor’s management to make estimates and assumptions that affect the reported amounts of the assets and liabilities and disclosures of contingent liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the period covered by this report.  

In addition to the description below, please refer to Note 3 to the financial statements for further discussion of our accounting policies. 

The functional currency of the Trust is the British Pound Sterling in accordance with ASC 830, Foreign Currency Translation. 

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