GBP Faces Re-pricing Pressure amid BoE Rate Cycle Shift and Fed Meeting Expectations

GBP: BoE re-pricing might have come far enough for the time being

Sterling has been under pressure over the last week on the back of the re-pricing of the Bank of England (BoE) rate cycle. Here, expectations for the Bank Rate at the end of this year have dropped from a 6.35% peak to now 'just' 5.88%. Given the lack of top-tier UK data this week and what could be a slightly hawkish Fed meeting on Wednesday, it may well be that the repricing of the BoE rate cycle and sterling softness have come far enough for the time being. This could see EUR/GBP correct back towards the 0.8600 area.

GBP/USD could correct to the 1.2670/2700 area this week if the dollar correction does run a little further on the Fed story.