BoE Inflation Concerns Boost Sterling Against Major Peers

Sterling traded firmer against most major peers on Monday, rising 0.13% to about $1.3256 in European dealing. The Bank of England's (BoE) concern over persistent inflation pressures provided support for the currency.

Deputy Governor Dave Ramsden pointed to upside inflation risks from energy, weather, and AI-linked supply chains, alongside indirect effects via food prices and potential second-round dynamics. His FXS Speechtracker reading was 8.4/10 versus a 7.1/10 historic baseline.

Market expectations are for the BoE to tighten monetary policy in response to inflationary pressures. Brown Brothers Harriman said markets are pricing about 100 basis points of BoE tightening over the next 12 months to 4.75%, while HSBC cited pricing of around 100bp by July 2027.