Sterling Hovers Near Three-Month Low on Strong Dollar
Sterling ended the week just above $1.32, hovering near its lowest level in three months, as the US dollar remained supported by growing expectations of further Federal Reserve rate hikes this year. Investors also assessed recent comments from Bank of England policymakers for clues on the outlook for monetary policy. The US-Iran conflict and elevated energy prices continue to fuel concerns over renewed inflationary pressures, prompting markets to price in a solid probability of a 25bp BoE rate hike in November. BoE Deputy Governor Sarah Breeden said it could become “increasingly appropriate” to respond to rising inflation risks by raising interest rates. Deputy Governor Clare Lombardelli likewise said rates may need to rise if energy prices remain elevated, while MPC member Swati Dhingra, one of the more dovish policymakers, said inflation expectations were not yet a source of concern. Meanwhile, UK consumer confidence reached its highest level in more than two years in September.
32, hovering near its lowest level in three months, as the US dollar remained supported by growing expectations of further Federal Reserve rate hikes this year. Investors also assessed recent comments from Bank of England policymakers for clues on the outlook for monetary policy. The US-Iran conflict and elevated energy prices continue to fuel concerns over renewed inflationary pressures, prompting markets to price in a solid probability of a 25bp BoE rate hike in November. BoE Deputy Governor Sarah Breeden said it could become “increasingly appropriate” to respond to rising inflation risks by raising interest rates.
Deputy Governor Clare Lombardelli likewise said rates may need to rise if energy prices remain elevated, while MPC member Swati Dhingra, one of the more dovish policymakers, said inflation expectations were not yet a source of concern. Meanwhile, UK consumer confidence reached its highest level in more than two years in September.