Sterling Could Extend Gains Vs Dollar on Improved Rate Differential

Sterling Could Extend Gains Vs Dollar on Improved Rate Differential

1024 GMT – Sterling could rise further against a weaker dollar as interest rate differentials move in favor of the U.K. currency, ING says. “GBP/USD can count on an improved rate differential, which has recently moved back into positive territory (2-year swap rate as reference) by around 25 basis points and is at its highest since October 2022,” ING analyst Francesco Pesole says in a note. GBP/USD could re-test the recent 1.2543 highs by the end of this week as the Bank of England is expected to lift interest rates again at the May 11 meeting and potentially signal further rises, while the market is pricing in more rate cuts for the Federal Reserve by year-end, he says. GBP/USD rises 0.5% to 1.2474.(renae.dyer@wsj.com)

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