Sterling gains early in European trading but face pressure from BoE’s cautious stance despite a hawkish vote split.
The British Pound (GBP) climbed to around 1.3500 against the US Dollar (USD) in early European trading on Monday, outperforming major peers. The move comes ahead of UK Q2 GDP data, though analysts doubt the rally’s sustainability amid expectations the Bank of England (BoE) will hold interest rates steady.
Despite a more hawkish-than-expected vote split at the BoE’s latest meeting, Governor Andrew Bailey’s dovish tone has weighed on the currency. Rabobank analysts noted a rise in GBP net shorts last week, reflecting bearish sentiment. Rising oil prices and global inflation concerns have yet to shift the BoE’s near-term policy outlook.
The pound was strongest against the Japanese Yen but faces headwinds from cautious central bank communication and speculative positioning.