"Markets expect rate cuts this year, we do not endorse the market curve, but it is not unreasonable for the market to think that," Bank of England (BoE) Governor Andrew Bailey said while testifying before the UK Treasury Select Committee on Tuesday.

"We are having to walk a narrow path on monetary policy," Bailey added and noted that there has been a lot of emphasis on UK recession rather than on the strong story on employment.

Market reaction

GBP/USD clings to modest daily gains slightly above 1.2600 following these comments.