Nov 7 Reuters Sterling dropped against a strengthening U.S. dollar on Tuesday, with investors closely watching economic data and market bets on the Bank of Englands future moves.

Higher yields and a strong economy usually increase demand for the nation39;s currency.

The pound rose more than 2 versus the greenback last week, its biggest gain in almost four months, after the BoE held interest rates at a 15year high and stressed the need to continue fighting inflation, while U.S. yields and the greenback tumbled after the Fed suggested its tightening path was over.

Money markets priced in more than a 50 chance of rates being unchanged until June 2024 and a higher chance of a 25 basis points rate cut in August next year.

The Bank of England might wait until the middle of next year before cutting interest rates from their current 15year high, the BoE39;s Chief Economist Huw Pill said on Monday.

We think these comments are a mild sterling negative, and given the risk that Fedspeak puts equities on the back foot again, risksensitive sterling could hand back some of its recent gains, said Chris Turner, head of forex strategy at ING.

The dollar advanced on Tuesday as last week39;s rally in riskier currencies took a breather.

Sterling was last down 0.15 at 1.2320. It hit 1.2428 on Monday, its highest in more than a month.

Markets expect the BoE to lower rates in 2024, but starting a bit later than the Fed and probably acting with less intensity, said Roberto Mialich,…