Pound Slips on Stronger US Dollar

2026-08-28 14:54 By Joana Ferreira 1 min. read

The British pound fell toward $1.35, its weakest level since August 19, as hawkish Fed remarks supported the US dollar, while lower Brent crude prices eased UK inflation concerns and pushed expectations for the next BoE rate hike into 2027 from late 2026.

In his first major speech since becoming chair in May, Warsh warned that inflation has not meaningfully slowed and said policymakers need clearer evidence that underlying price pressures are easing; otherwise, the Fed still has “work to do.” Meanwhile, LSEG data showed markets pricing around 24 basis points of BoE tightening by December and 36 basis points by February 2027.

UK inflation rose to 2.9% in July, driven by higher household energy bills, and is expected to climb further toward year-end.

However, the labor market has remained subdued, which could make the BoE more cautious about tightening policy in the near term.



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