According to Jinshi Data, Derek Halpenny of Mitsubishi UFJ said that the prospect of the Bank of England cutting interest rates more than the market expected would hit the pound. The market's expectations for rate cuts this year appear "too cautious" and the pound may underperform non-US dollar currencies later this year.
The pound was the worst performing G10 currency in the previous session as an unexpected downward revision to the UK's December manufacturing PMI and a sharp rise in natural gas prices modestly increased expectations of a rate cut in February.