Sterling Slips as US Dollar Gains from Rate Hike Expectations

Sterling has hovered near its three-month low against the US dollar, reaching levels above $1.32 at the end of the week.

The dollar's strength is attributed to growing expectations of further Federal Reserve rate hikes this year.

Investors are closely monitoring comments from Bank of England policymakers for clues on their outlook for monetary policy.

Deputy Governor Sarah Breeden said it could become 'increasingly appropriate' to respond to rising inflation risks by raising interest rates.

Similarly, Deputy Governor Clare Lombardelli stated that rates may need to rise if energy prices remain elevated.

MPC member Swati Dhingra's comments were more dovish, but still acknowledged the potential for inflation expectations to become a concern.