Pound Falls as Traders Reassess BoE Rate Hike Bets

The British Pound (GBP) fell against its major peers on Friday as traders reassessed Bank of England (BoE) interest rate expectations. The BoE's monetary policy announcement on Thursday sparked a re-evaluation of tightening bets, with Deutsche Bank analysts noting that markets had 'dialed back expectations for BoE hikes in response.'

The implied probability of a September rate hike dropped from 60% to 30%, while 31bps of hikes were priced by year-end, according to Deutsche Bank.

BoE Governor Andrew Bailey emphasized that the bar for an interest rate hike remains high, but acknowledged that 'if Mideast conflict persists and we get second-round effects, we will likely need to raise rates.'