FX.co ★ Pound Falls Ahead of Fed, BoE Decisions

The British pound slipped below $1.35 to its weakest level since mid-August, as the dollar stayed firm ahead of an expected Federal Reserve rate hike on Wednesday, while the Bank of England is widely seen keeping rates on hold on Thursday. BoE Governor Andrew Bailey has pushed back against expectations of an imminent additional rate increase, but surging energy costs have complicated the inflation outlook, with oil trading well above $100 a barrel amid renewed hostilities in the Middle East. Earlier this month, data showed the UK economy growing at its fastest pace in 18 months in July, driven by AI-related activity and sustained momentum following a strong first half of the year. Goldman Sachs expects the BoE to leave the Bank Rate unchanged at 3.75% on Thursday, before implementing a 25-basis-point hike in November as inflation remains persistent and growth proves resilient. Markets, meanwhile, are pricing in four BoE rate increases by mid-2027.