Sterling Under Pressure as BoE Rate-Hike Bets Ease

Sterling remained below $1.34 as traders slightly pared back expectations for Bank of England rate hikes amid a decline in oil prices. Brent crude eased toward $100 a barrel after US President Donald Trump left the door open to diplomacy with Iran, helping to reduce fears of an imminent supply shock, while stronger regional crude flows have further eased pressure on physical markets. UK policymakers made clear last week that the outlook for inflation, and therefore interest rates, will depend heavily on the path of oil and gas prices in the coming months. Markets currently price around an 80% chance of a rate hike at the November meeting, with roughly a 56% probability of a second increase by year-end. Meanwhile, investors are turning their attention to next month’s Autumn Budget, with the government reportedly considering plans to extend a new property tax to homes worth more than £1.5 million.