Pound Gains Despite Delayed Rate Hike Expectations
The British Pound (GBP) has strengthened against the US Dollar (USD), rising to around 1.3600 during Asian hours on Friday after two days of losses.
This modest gain comes despite growing concerns that the Bank of England (BoE) may delay its next interest rate hike, with market expectations now shifted from late 2026 to early 2027. According to LSEG pricing data, financial markets reflect just 24 basis points of policy tightening by December and 36 basis points by February 2027.
The shift in expectations is attributed to easing inflation concerns, driven by recent declines in Brent crude oil prices. As a result, the probability of a rate increase at the BoE's September meeting has decreased to around 15%, with less than 4 basis points priced in.