Bank of England Governor Bailey weakens bets on interest rate hikes, pound may fall further.

Michael Pfister of Deutsche Bank said in a report that the pound faces further downside risks after Bank of England Governor Andrew Bailey weakened market expectations for a turn towards rate hikes. Bailey told Reuters that the market was getting ahead of itself in digesting rate hike expectations, mentioning risks to economic growth and employment. Data from the London Stock Exchange Group shows that the market is currently expecting two rate hikes by December, down from a peak of three. Pfister said, "But based on Bailey's statement, we still expect a pullback and anticipate that rates will remain unchanged this year." He said this could lead to the pound falling against the euro in the coming months, along with political risks in the UK. The euro rose 0.2% against the pound to 0.8722 pounds, while the pound fell 0.6% against the dollar to 1.3221 dollars.