Oct 3 Reuters Sterling fell to a new 612month low against the dollar on Tuesday on concerns about the economic outlook and expectations that the Bank of England might be done with rate hikes.

The greenback reached fresh 11month highs after strong U.S. economic data bolstered the view that the Federal Reserve will keep interest rates higher for longer.

Sterling hit 1.2061, its lowest level since midMarch, and was last down 0.1 at 1.2075.

The gloom around the U.K. economy cleared a bit last week, as growth for the year39;s first quarter was revised significantly upwards. Still, concerns about the state of the economy recently supported the pound selloff.

Britain39;s economy displayed apparent recession signals a couple of weeks ago, a day after the Bank of England called to halt its long run of interest rate increases.

What hurt sterling was the adjustment of market expectations for future rate hikes, said Roberto Mialich, global forex strategist at Unicredit, after mentioning that before summer investors priced in a terminal rate at 6.

Money markets show traders price a 32 chance of a rate rise at the upcoming BoE meeting in November. They also see an around 40 chance of a terminal rate at 5.5 by yearend or early 2024, from the current 5.25, and almost no chance of the BoE hiking up to 6.

We don39;t see any catalyst able to change the market direction, with the pound that will probably test its yeartodate low at 1.1805, Unicredit39;s Mialich added.

Speculators…