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GBP/USD slips as dollar demand grows on Fed hike expectations

GBP/USD fell to 1.3228, while markets expect a more than 80% chance of a 25 basis point Bank of England hike in November.

Reported · Written up by our desk · Major Pairs

GBP/USD slid to 1.3228 on Wednesday, with the pound holding near three-month lows, as Action Forex said investors continued to favor the US dollar.

The outlet pointed to expectations that the Federal Reserve could deliver a rate hike as early as October, while the Bank of England is not expected to change policy until November.

Action Forex also linked dollar support to high oil prices and stalled negotiations to resume full operations at the Strait of Hormuz, which it said raised inflation risks and boosted safe-haven demand for the dollar.

In the UK, markets estimate the likelihood of a 25 basis point BoE rate hike in November at over 80%, and the report said the Bank of England’s Deputy Governor Dave Ramsden indicated he would support further hikes if inflationary pressures persist.

Latest closeGBP/USD 1.325 ▲0.1%

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