Pound Slips as Dollar Gains and BoE Hike Bets Rise

2026-09-10 13:32 By Joana Ferreira 1 min. read

The British pound weakened to around $1.35 as the dollar strengthened, despite growing expectations for further Bank of England rate hikes amid mounting inflation concerns.

Rising energy prices, alongside the ECB’s rate increase and more hawkish inflation outlook, added to pressure on UK yields.

Brent crude climbed above $100 a barrel, while UK natural gas prices reached their highest level since late 2022 as escalating Middle East tensions heightened concerns over energy supplies.

Markets are now fully pricing four BoE rate increases by the end of 2027, despite Governor Andrew Bailey pushing back against the view that another hike is inevitable and stressing that future decisions will depend on evolving economic and geopolitical developments.

Meanwhile, the dollar strengthened further after stronger-than-expected US PPI data lifted the implied probability of a Fed rate hike next week to above 70%.



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