Dollar Rallies on Oil Prices and Hawkish Fed Expectations

The pound sterling slipped on Monday, dipping below $1.35 as the dollar rallied due to rising oil prices and expectations of a hawkish Federal Reserve rate hike.

At 04:25 ET (08:25 GMT), sterling was last at 1.3482, down 0.33%, while the euro fell 0.55% to 1.1535, breaking below the 1.1600 level it held last week.

The dollar's strength is expected to continue, with Francesco Pesole, FX Strategist at ING, stating 'We continue to favour a moderately stronger dollar from here.'

Pesole also mentioned that a return to the 99.50-100 range in the DXY dollar index 'remains a tangible possibility... and fully in line with current drivers,' citing Gulf supply risks alongside fresh AI-related pressure on equities.