The GBP/USD pair is struggling to hold on to the 1.38 handle. Economists at Scotiabank expect the cable to end the year around this level despite Bank of England's rate hike expectations.

Cable likely to close 2021 around 1.38

“The GBP remains well supported by hawkish BoE expectations that should prevent sustained declines under 1.36 but we think there is likely more downside than upside risk to market expectations for BoE tightening as already over 100bps in hikes are priced in between now and end-2022.”

“We think the GBP/USD will struggle to make a push toward a test of 1.40 despite the high probability of at least one hike shortly and think it more likely that the pound closes the year near the 1.38 level.”