Pound Holds Near Six-Month High as BoE Rate Hike Bets Persist

2026-08-26 08:35 By Joana Ferreira 1 min. read

The British pound traded around $1.36, near its strongest level since mid-February, as markets continued to price in Bank of England rate hikes this year despite easing oil prices, while remaining concerned over sticky inflation and rising government debt.

Brent crude fell for a third straight session after Iran held talks with Oman on reopening the Strait of Hormuz, with Oman’s foreign ministry saying a temporary corridor could be announced soon.

Unverified reports also suggested the US and Iran could reach a new ceasefire agreement in the coming days.

Markets continue to price at least 25 bps of BoE tightening by year-end, following data showing UK inflation accelerated to 2.9% in July, its highest level since March, with further increases expected toward year-end.

Attention will also turn to the government’s first budget under Andy Burnham in October.

On Tuesday, Britain unveiled plans to spend £10 billion on lower-cost housing for renters, with a focus on London.



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Pound Holds Near Six-Month High as BoE Rate Hike Bets Persist
The British pound traded around $1.36, near its strongest level since mid-February, as markets continued to price in Bank of England rate hikes this year despite easing oil prices, while remaining concerned over sticky inflation and rising government debt. Brent crude fell for a third straight session after Iran held talks with Oman on reopening the Strait of Hormuz, with Oman’s foreign ministry saying a temporary corridor could be announced soon. Unverified reports also suggested the US and Iran could reach a new ceasefire agreement in the coming days. Markets continue to price at least 25 bps of BoE tightening by year-end, following data showing UK inflation accelerated to 2.9% in July, its highest level since March, with further increases expected toward year-end. Attention will also turn to the government’s first budget under Andy Burnham in October. On Tuesday, Britain unveiled plans to spend £10 billion on lower-cost housing for renters, with a focus on London.
2026-08-26
Pound Holds at Six-Month Highs
The British pound traded above $1.36 in the final full week of August, near its strongest level since mid-February, as the US dollar faced pressure following the US Treasury’s unexpected plan to at least double its purchases of longer-dated government bonds. Investors also awaited Fed Chair Kevin Warsh’s remarks at Jackson Hole on Friday, which are expected to offer insights into the interest rate outlook. In the UK, money markets continue to price in one Bank of England rate hike by year-end, with another quarter-point increase fully anticipated by early 2027. Recent data showed UK inflation accelerating to 2.9% in July, the highest since March, while core inflation exceeded expectations at 2.6%. PMI readings indicated faster business activity expansion, and consumer confidence reached a two-year high in August, providing an early boost for new Prime Minister Andy Burnham. However, the UK remains vulnerable to high inflation driven by the Iran conflict.
2026-08-24
Sterling Rises to 6-Month High
The British pound strengthened above $1.363, reaching its highest level in six months as a weaker US dollar boosted major currencies. Sterling benefited from the sharp dollar decline after the US Treasury unexpectedly announced plans to at least double its purchases of longer-dated government bonds. The move is aimed at supporting liquidity and containing elevated long-term borrowing costs, which contributed to a broad rise in G10 currencies. Domestic factors have also supported sterling, with UK inflation remaining relatively high and reinforcing expectations for tighter monetary policy. Consumer price inflation accelerated to a four-month high in July, although recent labour-market data indicated some cooling in employment conditions. Markets continue to price in one Bank of England rate increase by the end of this year, with another quarter-point hike fully reflected by April next year.
2026-08-20