Pound Hits Near-High as Rate Hike Bets and Dollar Weakness Continue

The British pound has extended its rally for four consecutive weeks, driven by firm rate-hike bets and a weaker US dollar. According to Niket Nishant's report on August 21, sterling was up 0.19% to $1.3658, hovering near its highest level since February.

Economists polled by Reuters expect the Bank of England to keep borrowing costs unchanged this year, but traders are still pricing in at least one rate increase in 2026, creating a disconnect between market expectations and central bank projections.

Brock Weimer, an analyst from Edward Jones, believes that recent inflation data gives the BoE room for hikes this year, with a 'reasonably strong chance' of additional hikes through 2027 if inflation doesn't come down.