Pound's Rally Halted by Mismatch Between Market Pricing and Economist Expectations

The British pound is on track for its fourth consecutive weekly gain, boosted by a weak dollar and recent economic data that keeps rate-hike bets alive.

Sterling was last up 0.19 percent to USD1.3658, near its highest since February. Against the euro, it remained steady at 85.66 pence.

Economists expect the Bank of England (BoE) to keep borrowing costs unchanged this year, while traders are pricing in at least one increase in 2026.

Analyst Brock Weimer from Edward Jones notes that inflation running above comfort levels gives the BoE room for hikes this year and a strong chance for additional hikes through 2027 if inflation doesn't decline.