The British pound rose on Thursday against a basket of major currencies, extending gains for the third consecutive day against the US dollar and recording its highest level in five weeks, amid weak expectations for the Bank of England to continue easing monetary policy and cutting interest rates.

To reprice those expectations, investors later today await key UK economic data on growth during the second quarter of this year and during June.

Price Overview

The pound rose against the dollar by 0.1% to $1.3592 its highest since July 10 from the opening price of $1.3578, with a low of $1.3570.

On Wednesday, the pound gained about 0.6% against the dollar, marking a second consecutive daily rise, as the US currency continued to face selling pressure in the forex market.

UK Interest Rates

Following last weeks hawkish Bank of England meeting, traders reduced bets on further BOE rate cuts, now pricing in an additional 17 basis points of cuts this year.

The probability of a 25 basis point BOE rate cut in September is currently steady at around 30%.

UK Economic Growth

To reprice the above expectations, investors later today are awaiting crucial UK data on economic growth in the second quarter and monthly growth for June.

Forecasts point to UK GDP growing by 0.1% in Q2, after a 0.7% rise in Q1 the best pace in a year with monthly growth of 0.2% in June, compared to a 0.1% contraction in May.

Pound Outlook

At Economies.com, we expect that if UK economic growth data proves stronger than market forecasts, the probability of a BOE rate cut in September will decline, leading to further gains in the pounds levels.