Sterling Surges on UK GDP Revision and Rate Expectations

The UK economy's stronger-than-expected growth in Q2 has boosted sterling against major peers, pushing it to a six-week high versus the euro.

The Bank of England rate expectations have also increased, with traders pricing in 33 basis points of tightening by year-end and more than 100 basis points by 2027, according to LSEG data.

Nicolas Trindade, senior fixed income portfolio manager at BNP Paribas Asset Management, believes markets may be overly hawkish and that the BoE could stay on hold if conditions are resolved by November, but may feel pressure to raise rates if they are not.