FX.co ★ Sterling Hovers Near Three-Month Low on Strong Dollar

Sterling ended the week just above $1.32, hovering near a three‑month low, as the US dollar remained supported by growing expectations of additional Federal Reserve rate hikes this year. At the same time, investors weighed recent remarks from Bank of England (BoE) officials for signals on the future path of UK monetary policy.

The ongoing US‑Iran conflict and elevated energy prices continued to stoke concerns about renewed inflationary pressures, leading markets to price in a strong likelihood of a 25bp BoE rate increase in November. BoE Deputy Governor Sarah Breeden said it could become “increasingly appropriate” to respond to rising inflation risks with higher interest rates. Deputy Governor Clare Lombardelli similarly indicated that rates might need to rise if energy prices remain elevated, while MPC member Swati Dhingra—one of the more dovish policymakers—stated that inflation expectations were not yet a cause for concern.

Meanwhile, UK consumer confidence in September rose to its highest level in more than two years.