Pound Poised for Monthly Gains Amid Rate Hike Bets and Stability

The British pound is poised for gains against both the dollar and euro in July, as investors weigh expectations of interest-rate hikes and stability in UK politics.

Despite slipping 0.2% to $1.344 against the dollar on Friday, sterling remains headed for a weekly gain and a more than 1% jump for the month - its first increase after two straight months of declines.

The pound is one of the few G10 currencies that have outperformed the dollar this year, underpinned by rate-tightening expectations. However, concerns about the fiscal health of the economy continue to keep investors wary of British assets.

Money markets are pricing in at least one 25-basis-point rate increase by the end of the year, according to LSEG-compiled data.