Sterling Little-Changed as Rate-Hike Bets Strengthen

2026-09-08 07:55 By Joana Ferreira 1 min. read

Sterling was little changed just above the $1.35 mark as renewed inflation concerns supported expectations for further Bank of England rate hikes.

Brent approached $100 a barrel, while UK natural gas prices climbed to their highest level since late 2022 amid renewed tensions in the Middle East and reports that Iran and Oman were nearing an agreement to manage shipping through the Strait of Hormuz.

Markets are fully pricing in a 25-basis-point BoE rate increase by December and a second hike by March 2027, according to LSEG data.

Investors also continued to assess the government’s commitment to fiscal discipline and restoring the UK’s credibility in international bond markets ahead of the Oct. 28 budget, alongside plans to boost regional growth by using public institutions to attract private investment.

In the US, markets are awaiting key inflation data later this week, following Friday’s strong jobs report, which pushed the probability of a Fed rate hike next week to nearly 60%.



News Stream
Sterling Little-Changed as Rate-Hike Bets Strengthen
Sterling was little changed just above the $1.35 mark as renewed inflation concerns supported expectations for further Bank of England rate hikes. Brent approached $100 a barrel, while UK natural gas prices climbed to their highest level since late 2022 amid renewed tensions in the Middle East and reports that Iran and Oman were nearing an agreement to manage shipping through the Strait of Hormuz. Markets are fully pricing in a 25-basis-point BoE rate increase by December and a second hike by March 2027, according to LSEG data. Investors also continued to assess the government’s commitment to fiscal discipline and restoring the UK’s credibility in international bond markets ahead of the Oct. 28 budget, alongside plans to boost regional growth by using public institutions to attract private investment. In the US, markets are awaiting key inflation data later this week, following Friday’s strong jobs report, which pushed the probability of a Fed rate hike next week to nearly 60%.
2026-09-08
Pound Edges Higher as Healey Pledges Fiscal Discipline
The British pound edged higher toward $1.355 as investors digested Chancellor John Healey’s first major speech ahead of the Oct. 28 budget. Healey pledged to maintain fiscal discipline and restore the UK’s credibility in international bond markets, while outlining plans to boost regional growth by using institutions including the National Wealth Fund and British Business Bank to attract private investment. Higher borrowing costs, driven by renewed inflation concerns amid the US-Iran war and uncertainty over Prime Minister Andy Burnham’s spending plans, are eroding the government’s fiscal headroom and fueling expectations of tax increases in the budget. Meanwhile, oil prices approached seven-week highs after US strikes on Iranian oil tankers. On the economic data front, UK firms increased full-time hiring in August for the first time in four years, while house prices fell year-on-year for the first time since November 2023.
2026-09-07
Sterling Steady Ahead of UK's Healey Speech
The British pound was little changed, trading just above $1.35, as investors awaited UK Chancellor John Healey’s first major speech on Monday, ahead of next month’s budget announcement. Oil prices moved closer to seven-week highs after the US struck three Iranian oil tankers over the weekend, destroying one, while Tehran threatened to establish a new restricted zone outside the Strait of Hormuz. Higher oil prices have been a key driver of the global bond selloff, leaving UK gilts particularly vulnerable. On the economic data front, UK firms also increased full-time hiring in August for the first time in four years, according to a closely watched REC survey. The data will be of particular interest to Bank of England policymakers as they assess the strength of the labor market. Meanwhile, UK house prices fell year-on-year for the first time since November 2023, Lloyds data showed.
2026-09-07