The GBP/USD pair risks falling to 1.25 in the short-term, as the greenback will likely benefit from markets scaling back expectations of an aggressive rate cut by the Federal Reserve (Fed) in July, according to analysts at Nomura.
A 25 basis point Fed rate cut now looks more likely than a 50 basis point cut priced in by markets earlier this month.
Further, the analysts believe the positives for Sterling, particularly the hawkish Bank of England (BOE), have faded.
BOE's chief Carney said on Wednesday that the central bank may have to cut interest rates in the event of a no-deal Brexit.
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