In the Asian session on Friday (April 28), GBP/USD fell back from its highs, temporarily reporting at 1.2495, a drop of 0.01%. The Bank of England‘s interest rate hike expectations have become an important factor boosting the pound.
Economist Peel said signs of persistent inflation would justify further rate hikes. Policy makers need to be alert to the risk of “persistence in inflation” and act accordingly to reduce CPI inflation to the 2 percent target. Expectations of another 25 basis point rate hike from the Bank of England in May could support the pound and further limit the downside for the GBP/USD pair. Stronger UK wage growth data and consumer inflation data released last week added to the bets, which in turn favored bullish traders and supported the prospect of some meaningful near-term appreciation in sterling.
