Sterling Slips as Oil Rebound Revives Inflation Concerns
Sterling traded around $1.32, close to a three-month low against the dollar touched last week, as a rebound in oil prices added to inflation concerns and reinforced expectations for UK interest rates to remain higher for longer. Brent crude rose back above $100 a barrel as Iran intensified attacks on shipping in the Strait of Hormuz, prompting markets to price more than 100 basis points of Bank of England tightening by the end of next year. BoE policymaker Catherine Mann said Tuesday that inflation above the Bank’s 2% target appeared embedded in the economy and warned it could reach 4% around the turn of the year, when wage negotiations typically take place. Meanwhile, the dollar remained supported by expectations that the Federal Reserve will raise rates for a second time this year in December. Against the euro, sterling rose to its highest level since June last year, as concerns over France’s deepening fiscal crisis weighed on the common currency.
32, close to a three-month low against the dollar touched last week, as a rebound in oil prices added to inflation concerns and reinforced expectations for UK interest rates to remain higher for longer. Brent crude rose back above $100 a barrel as Iran intensified attacks on shipping in the Strait of Hormuz, prompting markets to price more than 100 basis points of Bank of England tightening by the end of next year. BoE policymaker Catherine Mann said Tuesday that inflation above the Bank’s 2% target appeared embedded in the economy and warned it could reach 4% around the turn of the year, when wage negotiations typically take place.
Meanwhile, the dollar remained supported by expectations that the Federal Reserve will raise rates for a second time this year in December. Against the euro, sterling rose to its highest level since June last year, as concerns over France’s deepening fiscal crisis weighed on the common currency.