The GBP is showing modest gains against the USD, outperforming G10 peers as markets prepare for the upcoming BoE meeting. Recent UK data has reduced expectations for easing, with a 25bps cut now priced in by June, note Shaun Osborne and Eric Theoret from Scotiabank.

GBP performance analysis

"The focus is on domestic risks and events as market participants look to Thursday’s BoE, where a widely anticipated hold is likely to be paired with a relatively upbeat tone."

"The GBP’s latest upswing appears to be fundamentally supported by the rise in spreads."

"Political risk remains elevated as markets eye developments related to PM Starmer’s leadership and the ongoing risk of challengers to the role."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)