Pound Falls to One-Month Low as Fed Outlook Boosts Dollar

2026-07-28 07:53 By Joana Ferreira 1 min. read

The British pound fell below $1.33, its weakest level in nearly a month, as investors tracked developments in the Middle East while the US dollar gained support from lingering expectations that the Federal Reserve could still raise interest rates on Wednesday.

Although a pause in US attacks on Iran pushed oil prices lower and eased inflation concerns, US Treasury yields declined only modestly, reflecting persistent market caution.

Investors are also awaiting the Bank of England's policy decision later this week, with markets widely expecting interest rates to remain unchanged at 3.75%.

Recent inflation data has reinforced that outlook, with annual consumer price growth slowing to a 15-month low of 2.6% in June, below the BoE's projections.

A delayed pass-through of higher wholesale energy prices to regulated household bills has kept UK inflation below levels seen in the US and the euro area, where central banks are still expected to raise interest rates in September or October.



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Pound Falls to One-Month Low as Fed Outlook Boosts Dollar
The British pound fell below $1.33, its weakest level in nearly a month, as investors tracked developments in the Middle East while the US dollar gained support from lingering expectations that the Federal Reserve could still raise interest rates on Wednesday. Although a pause in US attacks on Iran pushed oil prices lower and eased inflation concerns, US Treasury yields declined only modestly, reflecting persistent market caution. Investors are also awaiting the Bank of England's policy decision later this week, with markets widely expecting interest rates to remain unchanged at 3.75%. Recent inflation data has reinforced that outlook, with annual consumer price growth slowing to a 15-month low of 2.6% in June, below the BoE's projections. A delayed pass-through of higher wholesale energy prices to regulated household bills has kept UK inflation below levels seen in the US and the euro area, where central banks are still expected to raise interest rates in September or October.
2026-07-28
Pound Rebounds as Easing Middle East Tensions Lift Risk Sentiment
The pound rose to $1.334, rebounding from a three-week low reached last week, as easing tensions between the US and Iran and a sharp decline in oil prices boosted risk sentiment. Brent crude retreated from two-month highs after Washington and Tehran paused hostilities and resumed diplomatic contacts, helping to ease inflation concerns and prompting money markets to slightly scale back expectations for policy tightening. Investors are now focused on the Bank of England's policy decision later this week, with policymakers widely expected to keep interest rates unchanged at 3.75%. Recent inflation data has strengthened that view, with consumer price growth slowing to a 15-month low of 2.6% in June, below the BoE's forecasts. A delayed pass-through of higher wholesale energy prices to regulated household bills has also kept UK inflation below that of the US and the euro area, where the European Central Bank is still expected to deliver another rate hike in September or October.
2026-07-27
Pound Holds Near July Low on Dollar Strength
The pound traded around $1.33, remaining near its weakest level since July 1, as investors assessed a batch of stronger-than-expected UK data while the US dollar stayed supported by rising Middle East tensions and fresh US tariff measures. UK retail sales rose 1% in June, beating expectations for a 0.3% decline, helped by warmer weather and increased spending during the football World Cup. Consumer confidence also improved to a six-month high in July, while the Bank of England's Decision Maker Panel survey showed easing inflation expectations. Meanwhile, the S&P Global PMI indicated UK business activity returned to growth, exceeding forecasts. On the trade front, the US announced new tariffs of 10% to 12.5% on dozens of countries, including the UK and EU. Britain said the measures would not negatively affect UK businesses, with the existing UK-US trade agreement remaining in place and delivering improved terms on some exports, including whisky and medical technology.
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