Sterling Stuck Between Rate Hike Expectations

The Pound has been trading near its highest level since February at $1.3658 on Friday, despite economists and traders being unsure about the Bank of England's next move.

This recent lift in the pound is due to a softer US dollar and the sense that the UK economy has held up well enough to keep rate-hike talk alive.

Economists polled by Reuters expect the Bank of England (BoE) to keep interest rates unchanged this year, while market pricing tracked by LSEG still implies at least one hike in 2026.

This discrepancy matters because currencies tend to follow expected interest-rate gaps between countries. If investors think UK rates will stay higher than US rates for longer, sterling can look more attractive to hold.