Sterling Slips

2026-10-07 09:31 By Joana Ferreira 1 min. read

Sterling weakened toward $1.32, close to three-month lows, as a rebound in oil prices heightened inflation concerns and reinforced expectations for higher-for-longer interest rates, pushing gilt yields to multi-year highs and weighing on UK growth prospects.

Brent crude rose back above $100 a barrel as Iran intensified attacks on shipping in the Strait of Hormuz, prompting markets to price more than 100 basis points of Bank of England tightening by the end of next year.

BoE policymaker Catherine Mann said Tuesday that inflation above the Bank’s 2% target appeared embedded in the economy and warned it could reach 4% around the turn of the year, when wage negotiations typically take place.

Meanwhile, the dollar remained supported by expectations that the Federal Reserve will raise rates for a second time this year in December.

Against the euro, sterling rose to its highest level since June last year, as concerns over France’s deepening fiscal crisis weighed on the common currency.



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Sterling Slips
Sterling weakened toward $1.32, close to three-month lows, as a rebound in oil prices heightened inflation concerns and reinforced expectations for higher-for-longer interest rates, pushing gilt yields to multi-year highs and weighing on UK growth prospects. Brent crude rose back above $100 a barrel as Iran intensified attacks on shipping in the Strait of Hormuz, prompting markets to price more than 100 basis points of Bank of England tightening by the end of next year. BoE policymaker Catherine Mann said Tuesday that inflation above the Bank’s 2% target appeared embedded in the economy and warned it could reach 4% around the turn of the year, when wage negotiations typically take place. Meanwhile, the dollar remained supported by expectations that the Federal Reserve will raise rates for a second time this year in December. Against the euro, sterling rose to its highest level since June last year, as concerns over France’s deepening fiscal crisis weighed on the common currency.
2026-10-07
Sterling Holds Above $1.32 as UK Inflation Concerns Persist
Sterling traded slightly above $1.32 as elevated energy costs and persistent inflation concerns reinforced expectations for UK interest rates to remain higher for longer. BoE policymaker Catherine Mann said on Tuesday that inflation above the Bank’s 2% target appeared to have become embedded in the economy. She warned that inflation could reach 4% around the turn of the year, when wage negotiations typically take place, potentially adding to price pressures. Mann has been among a minority on the MPC voting for a 25-bp rate hike to 4% since July. Meanwhile, weaker-than-expected US PCE inflation and jobs data last week strengthened expectations that the Federal Reserve could leave rates unchanged in October, with a December move now seen as more likely. In the UK, construction activity continued to contract in September, though less than expected, while builders grew more cautious about the outlook amid higher rates, inflation, weak orders and Middle East uncertainty.
2026-10-06
Sterling Rebounds as Weak US Jobs Data Weighs on Dollar
Sterling extended gains above $1.32, recovering from its weakest level in three months as weaker-than-expected US employment data weighed on the dollar. The US economy added just 29,000 jobs in September, well below expectations of 90,000, strengthening expectations that the Federal Reserve may leave rates unchanged in October, while a December move is seen as more likely. Meanwhile, markets are pricing around 30 basis points of Bank of England tightening by year-end and roughly 90 bps by the end of 2027. Several policymakers, including Governor Andrew Bailey, have signaled greater openness to higher rates as rising energy costs increase the risk of inflation remaining above target. Elsewhere, sterling received support from comments by Prime Minister Andy Burnham favoring closer UK-EU ties ahead of a summit expected around November 20, including the possibility of revisiting EU membership after the next general election.
2026-10-02