Home›Forex›Major Pairs›GBP/USD rises to 2-week high as markets rethink Bank o…

GBP/USD rises to 2-week high as markets rethink Bank of England outlook

The pound climbed to 1.3552, supported by expectations for at least two Bank of England rate hikes by March next year, despite oil staying above $100 a barrel and ongoing Middle East tensions.

Reported · Written up by our desk · Major Pairs

GBP/USD rose to 1.3552 on Thursday, its highest level since 29 August, as traders reassessed the Bank of England’s monetary policy stance. The pound strengthened even as oil prices moved above $100 per barrel and Middle East tensions escalated.

Action Forex said the key support for sterling is shifting expectations around future interest rates. Investors do not expect an immediate rate increase at the next BoE meeting, but markets are pricing in at least two rate hikes by March next year, with about a 40% probability of a third.

The backdrop is also being reinforced by UK inflation dynamics. Consumer price inflation accelerated to 2.9% in July, up from 2.6% the previous month, while higher oil and gas prices add pressure to an economy that relies heavily on imported energy.

The Bank of England, however, is working to temper expectations for further tightening. Governor Andrew Bailey has said additional monetary tightening is not guaranteed, and uncertainty is also being driven by elevated oil prices and fiscal risks ahead of the autumn Budget.

Latest closeGBP/USD 1.355 ▲0.1%

More like this

Sources