Sterling's Struggles: Divided BoE and Resilient Fed Shake Currency Markets

Sterling faced a challenging week against the dollar, pressured by divided Bank of England policy views and a steadfast U.S. Federal Reserve. Although holding stable at $1.2500, the pound is set for a 0.8% weekly loss. Market projections anticipate rate cuts amid mixed economic signals from the UK and the US.

Sterling maintained its position against the dollar on Friday, but it appears poised to conclude the week on a down note. This comes after facing strain from discordant views of Bank of England policymakers and a U.S. Federal Reserve that's proving reluctant to cut interest rates.

The pound remained flat at $1.2500, having dipped to a one-month low of $1.2475 earlier in the day. It's on track for a 0.8% weekly decline, marking its second consecutive week of losses against the dollar.

On Thursday, the Bank of England chose to keep its main interest rate at 4.75%, although its policymakers are increasingly divided regarding necessary rate cuts to address a slowing economy. A surprising turn of events saw three of the nine Monetary Policy Committee members vote for a 0.25% rate cut, casting doubt on sterling's strength and providing some relief to Britain's struggling government bond markets.

(With inputs from agencies.)