GBP/USD bucked the broader firm dollar trend on Friday, striking a NorAm high of 1.2519 as it shrugged off forecast-beating U.S. PCE and employment cost data and probed above 1.25 for a fourth day with eyes on the 2023 high by 1.2545 as traders lean on hawkish BoE expectations.

Though still within its recent range, sterling price action hints that traders are aiming higher after failed attempts to push it below the rising 21-DMA, currently at 1.2443.

U.S.
core PCE and ECI beats notwithstanding, rate futures are projecting a 25bp Fed hike on May 3 that would be the last in the current cycle -- with just a 20% chance of a 25bp hike in June.
The BoE, by comparison, is expected to hike 71bp by its Sept.
21 meeting.

Relative futures strips on Eikon's IRPR pages, indicate the Fed will begin cutting rates in Q4 2023, while the BoE is expected to begin easing in late Q1 2024.

Current futures pricing show UK rates 75bp above U.S. rates by December 2024, which should lift GBP/USD to June 2022 highs by 1.2667, putting April 2022 highs by 1.2922 and 1.3181 in sharper focus.

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