COMMENT-Sterling bounces off Tuesday low as UK recession fears ebb after GDP

GBP/USD bounced off Tuesday's 1.2747 low after mixed, but optimistic, UK GDP and output data Wednesday hinted that Britain is moving toward more sustained growth, which should keep rates high for longer relative to the U.S. and the pound anchored near Friday's 1.2894 2024 high.

Today's data supports the prevailing view reflected on LSEG's IRPR that the BoE is likely to hold rates steady until H2 2024.

With the Fed and ECB likely to begin their pivot to lower rates in June 2024 the pound should stay relatively bid through August and even after the BoE begins cutting rates as the path lower for UK rates is expected to be considerably slower.

Rate futures markets see the BoE cutting 67bp by its December MPC meeting, while the Fed is seen cutting 82bp by its December meeting.

With UK rates and the pound likely to remain elevated, keeping GBP/USD firm, traders' focus is now on UK CPI data and the Fed on March 20 and the March 21 MPC meeting as traders look for clues on prices and BoE members rate and economic expectations after February's 3-way vote split.

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