Sterling slips from recent high

On Thursday, the pound slid against the euro and edged down slightly against the dollar as traders assessed whether recent gains linked to a central bank rate hike expectations had gone too far.

Sterling had earlier in the day hit a one-week high against the greenback as inflation and encouraging economic data fuelled speculation the Bank of England (BoE) will act first among prominent global policymakers to raise rates for the first time since the COVID-19 pandemic struck early last year.

Investors remain wary about the timing of any move, however, after the BoE surprised markets earlier this month by keeping rates steady when many had understood the hike was coming. Those expectations were further bolstered by data on Tuesday showing Britain's job market had weathered the end of the government's furlough support scheme, easing a significant worry about the risks of tightening monetary policy. While rate hike expectations support the pound, for now, analysts at Citi said on Thursday there are longer-term concerns for the currency amid wrangling between the European Union and Britain over the Northern Ireland part of the Brexit deal.

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