GBP Takes Hit as Markets Rethink BoE Rate Hike Bets

The British Pound (GBP) has underperformed against its major currency peers, trading marginally lower at around 1.3444 against the US Dollar (USD), following Thursday's Bank of England (BoE) monetary policy announcement.

Analysts at Deutsche Bank noted that the BoE was not 'edging towards a rate hike' at its latest meeting, despite the split vote on the MPC. Markets have since 'dialed back expectations for BoE hikes in response', with the implied probability of a September move dropping from 60% to 30%.

Deutsche Bank highlighted that '31bps of hikes [were] priced by year-end (-11.4bps on the day)', underscoring how investors reassessed the near-term tightening path following the BoE's communication.