Sterling Sinks to Three-Month Low Amid Waning Hawkish BoE Expectations

Sterling has continued its downward trend, hovering around a three-month low of 1.3200 against major peers and slightly firming versus the US Dollar at 1.3220 in the European session.

Over the past week, the GBP fell by 1.27% against the greenback as markets began to question hawkish Bank of England rate expectations.

The swaps curve still implies around 100bps of BoE hikes over the next 12 months, taking Bank Rate to 4.75%, despite the current setting of 3.75% being near the top of the BoE's estimated 2% to 4% neutral range.