Sterling fell in NorAm trading on Friday as haven flows on the back of regional bank and debt ceiling angst overshadowed steady UK GDP growth, pushing GBP/USD below 30-DMA support by 1.2487 and putting April lows sub-1.24 in focus.

As GBP/USD descends from recent highs, the question for bulls is how much resolve the BoE has for further rate hikes, particularly as UK growth is expected to weaken by year-end.

Relatively hawkish comments by BoE Chief Economist Huw Pill may not be enough to keep GBP/USD anchored near 2023 highs should U.S.-UK rates cease to diverge in H2 2023.

Markets are currently pricing in 41bp of hikes by the Sept.
21 MPC meeting, which should keep the pound anchored near recent highs with the Fed expected to halt rate hikes in June, and begin cutting in Q4 2023.

The risk for bulls is weak UK growth may shift the BoE's balance from inflation-fighting to fostering growth.

Should the expected UK rate advantage dissipate, GBP/USD is likely to tumble below 30-DMA support by 1.2488 as bears target April lows below 1.24.

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