BoE Rate Hike Odds Rise as Sterling Outperforms G10

Odds of a Bank of England rate hike are rising as sterling continues to outperform major peers. The pound has been the best performing G10 currency after the US dollar in the past month, a move that analysts find puzzling given lingering political risks.

The strength comes despite the view that the political risk premium has not eased enough to justify such a rally. The market is now pricing in a higher probability of tighter monetary policy from the BoE as the currency appreciates.