Pound Struggles Amid Dovish Rate Expectations

The British pound held steady on Friday at around its lowest in just under three months against both the euro and dollar, despite falling to $1.32 on Thursday.

Sterling's stability came as the US currency continued its sharp weekly increase, with rising energy prices and rate hike bets driving up demand for the dollar.

The dollar has rallied this week due in part to increased expectations of higher interest rates from the US Federal Reserve following last Wednesday's rate hike.

Currency strategist Francesco Pesole at ING noted that it is 'unlikely' the Bank of England will match market expectations for further tightening, which could lead to a 'large dovish repricing' in sterling.