21.09.202608:51:25UTC+00Sterling Under Pressure as BoE Rate-Hike Bets Ease

Sterling held below $1.34 as traders slightly scaled back expectations for Bank of England interest rate increases, following a decline in oil prices. Brent crude slipped toward $100 a barrel after US President Trump signalled openness to diplomacy with Iran, easing concerns over an imminent supply shock. At the same time, stronger regional crude flows have further reduced pressure in physical markets. UK policymakers reiterated last week that the outlook for inflation—and therefore for interest rates—will be heavily influenced by the trajectory of oil and gas prices in the coming months. Markets are currently pricing in around an 80% probability of a rate hike at the November meeting, and roughly a 56% chance of a second increase before year-end.

In the meantime, investors are refocusing on next month’s Autumn Budget, amid reports that the government is considering extending a new property tax to homes valued above £1.5 million. Elsewhere, the US dollar remained supported by expectations of further interest rate hikes from the Federal Reserve.