Sterling Falls to Late-June Lows

2026-10-14 13:15 By Joana Ferreira 1 min. read

Sterling fell below $1.32, returning to levels last seen in late June, as stronger-than-expected US inflation reduced expectations of the Federal Reserve holding rates steady in October.

US inflation rose to 3.7% year-on-year in September, above forecasts of 3.6%, while core inflation also exceeded expectations.

Meanwhile, investors assessed comments from Bank of England policymakers, with Chief Economist Huw Pill expressing skepticism about market expectations for four rate hikes over the coming year and arguing that stronger evidence was needed to justify a larger increase despite the need to address the energy shock triggered by the Iran war.

Governor Andrew Bailey, however, warned that a rate hike would become harder to avoid the longer the shock persists.

Markets are pricing in a near-100% chance of the BoE delivering its first rate hike in more than three years in November.

However, expectations for four 25-basis-point increases by June 2027 have eased slightly.



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Sterling Falls to Late-June Lows
Sterling fell below $1.32, returning to levels last seen in late June, as stronger-than-expected US inflation reduced expectations of the Federal Reserve holding rates steady in October. US inflation rose to 3.7% year-on-year in September, above forecasts of 3.6%, while core inflation also exceeded expectations. Meanwhile, investors assessed comments from Bank of England policymakers, with Chief Economist Huw Pill expressing skepticism about market expectations for four rate hikes over the coming year and arguing that stronger evidence was needed to justify a larger increase despite the need to address the energy shock triggered by the Iran war. Governor Andrew Bailey, however, warned that a rate hike would become harder to avoid the longer the shock persists. Markets are pricing in a near-100% chance of the BoE delivering its first rate hike in more than three years in November. However, expectations for four 25-basis-point increases by June 2027 have eased slightly.
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