Sterling Slips Amid Hawkish Rate Expectations

The British pound traded cautiously on Friday against major peers and was marginally firmer versus the US dollar, hovering around 1.3220 in the European session.

This comes after the pound fell by 1.27% against the greenback over the week as markets questioned hawkish Bank of England rate expectations.

The swaps curve continues to imply about 100bps of BoE hikes over the next 12 months, taking Bank Rate to 4.75%, even as the current setting of 3.75% sits near the top of the BoE’s estimated 2-4% neutral range.