Pound Extends Gains as Dollar Weakens and Rate-Hike Bets Remain Alive

The British pound continued its winning streak for the fourth consecutive week, buoyed by a weakening dollar and economic data that keeps rate-hike bets alive.

Sterling was last trading at $1.3658, just shy of its highest level since February, according to Reuters.

Economists polled by Reuters expect the Bank of England (BoE) to keep interest rates unchanged this year, but market pricing suggests at least one rate hike in 2026, according to data compiled by LSEG.

Brock Weimer, an analyst at Edward Jones, believes that inflation running higher than expected gives the BoE room for hikes this year. He also sees a 'reasonably strong chance' of additional hikes through 2027 if inflation doesn't come down.