British Pound Hits 5-week Low

GBPUSD decreased to 1.35, the lowest since August 2026. Over the past 4 weeks, British Pound US Dollar lost 0.5%, and in the last 12 months, it decreased 0.92%.

The British pound weakened below $1.35, touching its lowest level since mid-August, as the dollar remained supported ahead of a widely expected Federal Reserve rate hike on Wednesday, while the Bank of England is expected to hold rates on Thursday. BoE Governor Andrew Bailey has pushed back against expectations of another imminent rate hike, but surging energy prices have clouded the inflation outlook, with oil climbing well above $100 a barrel amid renewed Middle East hostilities. Earlier this month, data showed the UK economy expanded at its fastest pace in 18 months in July, supported by AI-related activity and continued momentum from a strong first half. Goldman Sachs expects the BoE to keep Bank Rate unchanged at 3.75% on Thursday, before delivering a 25-bp hike in November as inflation persists and growth holds up. Markets, meanwhile, are pricing in four BoE rate hikes by mid-2027.

The British pound edged higher to $1.35 as investors weighed stronger-than-expected UK GDP data ahead of next week’s Bank of England policy decision. UK GDP grew 0.4% month-on-month in July, beating forecasts, while growth over the three months to July also held at 0.4%. Markets expect the BoE to leave rates unchanged next week after Governor Andrew Bailey said on Tuesday that future decisions would depend on economic and geopolitical developments, pushing back against the view that another rate hike is inevitable. Still, markets are fully pricing four BoE rate increases by mid-2027 as the recent oil price rally kept inflation concerns elevated. In the US, the dollar remained supported by growing expectations of a Federal Reserve rate hike next Wednesday following stronger-than-expected core inflation data and signs of a resilient labor market.