Over five tough summer weeks, investors have slashed their bets on a stronger pound by 75 per cent as still-miserly earnings growth calls into the question the timing of the first UK interest rate rises in over seven years.

Sterling’s retreat – around 2.3 per cent, or almost four cents, against the dollar since early July – has come chiefly via a rebound for the US currency. But UK data, albeit only slightly weaker, has also had an impact, casting at least some doubt on once-popular bets that rates would rise this year.

CFTC data shows speculative investors have cut net long positions in sterling from more than 52,000 contracts in late June to just over 12,000 in the first week of August.

The Bank of England has said little to bolster expectations that rates will rise this year and even if minutes from its most recent monetary policy meeting later this month reveal the first vote for an immediate hike, money markets are only pricing in a small chance of higher rates by the end of the year.

The Bank of England has said little to bolster expectations that rates will rise this year

That is not to say the G7’s fastest-growing economy will not soon need to be cooled off a bit – a Reuters poll on Tuesday showed economists slightly increased their bets on a rate rise by the end of the year. But the consensus remained for it to come in the first quarter of 2015.

Deeper-rooted doubts are emerging among market participants and, it seems, policymakers too, about the labour market, inflation and the solidity of Britain’s economic upturn.

The majority, who have backed sterling’s rally since the start of last year, still foresee an earlier hike and the pound remains significantly stronger against the euro and its trade-weighted currency basket than against the dollar, down just 0.5 and 0.7 per cent respectively in the same five-week period.

The tone among strategists forecasting a rise in that time frame is cautious. Overnight interest rates traded for up to one year and forward rate agreements – which have been closely correlated to sterling in the past year – show the market pushing the first hike back into 2015.

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