Pound Surges on Revised Growth Rate, Traders Boost BoE Hike Bets

The UK pound has seen an increase in value following the revision of its growth rate for the second quarter. The official data showed that the April-to-June growth rate was revised up to 0.5% from 0.4%, which is higher than economists surveyed by Reuters had expected. This small tweak has significant implications, as it suggests that markets believe the economy is holding up well enough for the Bank of England (BoE) to keep its policy tight.

As a result, traders have increased their bets on a BoE rate hike by year-end, with LSEG-compiled pricing implying about 33 basis points of BoE tightening. However, BNP Paribas Asset Management warned that the market may be 'overly hawkish' and that a November decision could still leave rates unchanged.

The pound's rise is also influenced by comments from New York Fed President John Williams, which have shifted expectations toward a later US rate hike and affected currency crosswinds for sterling. The changes in market expectations can impact fixed-rate quotes, mortgage, and savings rates, as lenders rebuild their costs into new offers.