Pound Hits Six-Month High as BoE Rate Hike Expectations Rise

The British pound has been hovering near a six-month high against the US dollar due to expectations of interest rate hikes by the Bank of England this year. Sterling was last trading at $1.3632, with the euro buying 85.54 pence.

Analysts and economists see no change in interest rates, which could lead to a decline in the currency towards the end of the year. However, LSEG-compiled data shows that better-than-expected economic data has prompted expectations of at least 25 basis points in rate hikes this year.

Francesco Pesole, an FX strategist at ING, expects no interest rate hikes and a move to £0.870 in the coming months. This would mean an at least 2% drop from Tuesday's trading levels.