GBPUSD | Market outlook

Sterling strengthened on Tuesday against weakening dollar on the expectations that the BoE could raise interest rates faster than the European Central Bank. Markets are pricing in around 8 bps of an increase in interest rates by the Bank of England on Dec. 16. That has fallen from more than 12 bps at the start of last week. Investors perceive global central banks would end pandemic-era stimulus and raise interest rates as they looked to combat rising inflation without choking off growth. Sterling rose 0.3% versus the weakening dollar to 1.3360, after touching a December 2020 low of 1.3278 on Friday.