The Pound Sterling (GBP) is trading higher against its major peers, except for the US Dollar (USD). This movement follows comments from Bank of England (BoE) Monetary Policy Committee member Swati Dhingra, who expressed concerns about weak consumption and suggested potential for more than four interest rate cuts this year.

Traders have already accounted for two interest rate cuts by the BoE. Dhingra noted that continuing to cut at a gradual pace would still constrain monetary policy by the end of 2025.

GBP/USD gained from the selling pressure on the USD. The pair is currently in a consolidation phase near the 1.2650 mark.

The USD weakened as the 10-year US Treasury bond yield dropped below 4.3%. Treasury Secretary Scott Bessent stated that the administration aims to cut spending while easing monetary policy and lowering Treasury yields.

Dhingra’s statement is a departure from the more conservative stance we have seen from other BoE policymakers. If her view holds weight within the committee, we could see expectations shift towards a steeper path of rate reductions. Markets have priced in two cuts, but her comments signal that more may be on the table if economic conditions remain sluggish. If this sentiment gains traction among her colleagues, the pricing of GBP-denominated assets may adjust accordingly in the weeks ahead.

At the moment, the pound is capitalising on movement elsewhere, particularly in US markets, but has struggled to push beyond its recent trading range against the dollar. Price action near 1.2650 suggests a lack of conviction among traders, likely because upcoming data releases will determine whether the current direction holds. If new data reinforces Dhingra’s concerns, expectations of deeper rate cuts could weigh on sterling.

The US dollar, on the other hand, has taken a step back as bond yields ease. The decline in the 10-year Treasury yield below 4.3% tells us that investors are adjusting their positioning ahead of potential policy changes. Remarks from Scott signal a plan to rein in government spending while loosening monetary conditions—two levers that, if pulled correctly, could lower yields even further.

For traders navigating the coming weeks, the focus remains on whether additional BoE voices align with Dhingra’s outlook. If sentiment shifts further towards aggressive easing, we may see traders recalibrate their expectations for sterling. Meanwhile, the ongoing adjustment in US yields suggests that the market is preparing for potential shifts in Federal Reserve policy. Traders who position themselves in anticipation of these moves, rather than reacting to headlines, will have the advantage.