GBP/USD is trading above 1.23 after hitting a new cycle low at 1.2260 on Monday. Economists at BBH expect cable to test the May 2020 low near 1.2075 on a dip below 1.2250.

Bank of England tightening expectations have stalled

“We look for a break below the June 2020 low near 1.2250, which would set up a test of the May 2020 low near 1.2075.”

“WIRP suggests another 25 bp hike is fully priced in for the next meeting June 16, while the odds of a 50 bp move then are minimal. Looking ahead, the swaps market is pricing in 125-150 bp of total tightening over the next 12 months that would see the policy rate peak between 2.25-2.50%.”