Sterling Slightly Up as BoE Hike Bets Rise
Sterling edged higher to $1.325 but remained close to its weakest level in three months, as investors digested a series of hawkish comments from Bank of England policymakers, while growing expectations of further Fed rate hikes continued to support the US dollar. BoE Governor Andrew Bailey said persistently high energy prices would make it harder for the central bank to keep interest rates on hold. Meanwhile, MPC members Sarah Breeden and Clare Lombardelli also signaled that they were moving closer to supporting a rate hike, as rising energy prices increased the risk of inflation remaining above target. The warnings come at a challenging time for Prime Minister Burnham and Chancellor Healey, who are seeking to ease cost-of-living pressures while maintaining confidence in the economy ahead of the October 28 budget. Markets are pricing in roughly an 80% chance of a BoE rate hike in November, with slightly more than four 25-basis-point increases priced into the curve over the next year.
325 but remained close to its weakest level in three months, as investors digested a series of hawkish comments from Bank of England policymakers, while growing expectations of further Fed rate hikes continued to support the US dollar. BoE Governor Andrew Bailey said persistently high energy prices would make it harder for the central bank to keep interest rates on hold. Meanwhile, MPC members Sarah Breeden and Clare Lombardelli also signaled that they were moving closer to supporting a rate hike, as rising energy prices increased the risk of inflation remaining above target.
The warnings come at a challenging time for Prime Minister Burnham and Chancellor Healey, who are seeking to ease cost-of-living pressures while maintaining confidence in the economy ahead of the October 28 budget. Markets are pricing in roughly an 80% chance of a BoE rate hike in November, with slightly more than four 25-basis-point increases priced into the curve over the next year.