British Pound Hits 13-week Low

GBPUSD decreased to 1.32, the lowest since June 2026. Over the past 4 weeks, British Pound US Dollar lost 2.53%, and in the last 12 months, it decreased 1.77%.

Sterling edged lower towards $1.32, near a three-month low, as investors favored the US dollar amid rising expectations of a Fed rate hike as soon as October, while the Bank of England is not expected to move until November. Elevated oil prices, amid stalled talks to reopen the Strait of Hormuz, have reinforced expectations of further Fed tightening and boosted safe-haven demand for the dollar. In the UK, markets price an over 80% probability of a 25bp hike in November, with around four increases priced in by mid-2027. However, subdued UK GDP growth through 2026 and early 2027 could constrain the BoE’s scope for aggressive tightening. Deputy Governor Dave Ramsden said he would support higher rates if inflationary pressures persist, echoing recent warnings from Governor Andrew Bailey. The MPC voted 6-3 to hold rates at 3.75% earlier this month, while warning inflation could peak around 4%.

Sterling edged up to $1.326 as investors priced in a more hawkish Bank of England stance amid renewed inflation pressures, while oil prices rose after President Donald Trump rejected an Iranian proposal to reopen the Strait of Hormuz and end the Middle East conflict. BoE Deputy Governor Dave Ramsden said Monday he would be prepared to raise rates if “upside pressures” on inflation persist, echoing recent warnings from Governor Andrew Bailey and Deputy Governors Sarah Breeden and Clare Lombardelli that higher energy prices could fuel a wage-price spiral. The MPC voted 6-3 earlier this month to hold rates at 3.75%, while warning inflation could peak around 4%. Markets now price in an over 80% chance of a 25bp hike in November, with roughly four hikes priced in by mid-next year. Meanwhile, Chancellor John Healey stressed the need for fiscal discipline ahead of next month’s budget, highlighting the rising cost of servicing the UK’s elevated debt burden and its impact on public services.