Sterling Steadies as BoE Rate Hike Bets Are Rewritten

The British pound has steadied against major currencies as traders reassess their expectations for Bank of England interest rate hikes.

Recent market data and commentary have prompted a shift in outlook for UK monetary policy, with investors weighing inflation figures and economic growth against the central bank's tightening bias.

Market pricing for further BoE rate increases has softened, with traders now pricing a 60% chance of a hold on interest rates instead of a final quarter-point hike in November, down from near-certainty just a few weeks ago.

Analysts point to cooling UK inflation, which fell to 6.7% in the year to August 2023, down from a peak of 11.1% in October 2022.