The British pound is extending losses against the dollar as traders dramatically pull back expectations for aggressive Bank of England rate hikes, according to Scotiabank strategists Shaun Osborne and Eric Theoret. GBP/USD is now sliding toward early-July support levels as market pricing for a September rate increase has been slashed, with total anticipated hikes through December also reduced significantly.
The bearish reversal reflects growing doubts about the BoE’s ability to maintain its hawkish stance amid deteriorating economic conditions. Traders and currency desks should prepare for continued sterling weakness as the repricing of monetary policy expectations weighs on the pair. The shift comes at a critical juncture for UK assets, with implications for cross-border flows and hedging strategies.
FXnCO Insight
Position for further GBP downside targeting early-July lows while monitoring BoE communications closely, as any dovish surprises could accelerate sterling’s decline against major currencies.
Source: FXStreet