Pound Rises Amid BoE Rate Hike Speculation

(RTTNews) - The British pound strengthened against other major currencies in the European session on Tuesday, as investors expect the Bank of England to have a rate hike before the end of the year.

Markets had anticipated—that the Bank of England (BoE) would decrease interest rates twice this year. According to some reports, investors are now pricing in a rate increase of 25 basis points before the year ends.

Some members of the Monetary Policy Committee (MPC) at the Bank of England (BoE) are pushing for a short-term rate increase.

Investors are now focusing on the impending publication of U.S. inflation statistics and U.K. GDP data. These reports have the potential to influence expectations for the Federal Reserve (Fed) and the Bank of England, as well as ultimately dictate the future course of the GBP/USD exchange rate.

The British sterling started had started trading higher after it was confirmed that direct attacks between Iran and Israel have stopped.

European stocks traded higher, while the dollar fell from a two-month high and Brent crude futures fell below $93 a barrel after Israel and Iran agreed to halt attacks against each other, boosting hopes that peace negotiations could move forward.

Investors also cheered data that showed China's exports and imports expanded rapidly in May.

In the European trading today, the pound rose to nearly a 1-1/2-month high of 1.0669 against the Swiss franc, from an early low of 1.0640. The pound may test resistance around the 1.07 region.

Against the U.S. dollar and the yen, the pound advanced to 4-day highs of 1.3406 and 214.71 from early lows of 1.3331 and 213.50, respectively. If the pound extends its uptrend, it is likely to find resistance around 1.36 against the greenback and 215.00 against the yen.

Against the euro, the pound edged up to 0.8628 from an early low of 0.8648. The next possible upside target for the pound is seen around the 0.85 region.

Looking ahead, U.S. ADP weekly employment data, U.S. and Canada trade data for April, U.S. Redbook report, U.S. existing home sales data for May and wholesale inventories for April are slated for release in the New York session.