Sterling Falls as Strong US Data Boosts Dollar
The British pound weakened sharply to around $1.325, reaching its lowest level since late June, as the US dollar strengthened following stronger-than-expected PMI data and a series of hawkish comments from Federal Reserve policymakers. The developments reinforced expectations of further monetary tightening in the US, adding pressure to sterling. Higher oil prices, amid continued uncertainty surrounding US-Iran talks, also weighed on risk-sensitive assets. In the UK, the latest PMI survey showed that business activity continued to expand in September, although the pace of growth eased slightly and fell short of market expectations. Despite the softer reading, markets continue to price in a meaningful probability of a 25-basis-point Bank of England rate hike in November.
325, reaching its lowest level since late June, as the US dollar strengthened following stronger-than-expected PMI data and a series of hawkish comments from Federal Reserve policymakers. The developments reinforced expectations of further monetary tightening in the US, adding pressure to sterling. Higher oil prices, amid continued uncertainty surrounding US-Iran talks, also weighed on risk-sensitive assets. In the UK, the latest PMI survey showed that business activity continued to expand in September, although the pace of growth eased slightly and fell short of market expectations.
Despite the softer reading, markets continue to price in a meaningful probability of a 25-basis-point Bank of England rate hike in November.