Sterling rose to a 2024 high at 1.3314 in early NorAm after the BoE, as expected, held rates steady, adding to GBP/USD strength amid diverging U.S. and UK rate spreads, which is likely to push cable higher still.

STIR futures are discounting further rate divergence in 2024 and 2025, though sterling's post-BoE rise was quickly dialed back after a surprise drop in weekly U.S. jobless claims.

Still, the BoE is expected to cut more slowly than the Fed, which should support the pound.

The resistance to a more protracted rate-based slide in the dollar has come from more hawkish Fed rate expectations, relative to recent futures pricing in 2025, based on the dot-plot projections released Wednesday.

However, traders will probably take those forecasts with a grain of salt.

SOFR futures are anchored in the low 3% area in 2027 and beyond, with SONIA futures a touch higher, which implies the UK rate advantage will remain intact and continue to support sterling.

For more click on FXBUZ