GBP Falls to Three-Month Low Amid Expectations of Hawkish Fed Policy
The Pound Sterling (GBP) fell to a three-month low against the US Dollar (USD), reaching $1.3220 on Thursday, amidst growing expectations of Federal Reserve interest rate hikes.
Expectations of further tightening strengthened after Wednesday's PMI figures comfortably exceeded forecasts, suggesting the US economy could still be running at a strong pace. Initial jobless claims unexpectedly fell, further supporting rate hike bets, which now hold a greater than 50% probability of a 50 basis point increase by the end of the year.
The Pound remained subdued due to these expectations, as global bond markets reacted with heightened volatility. Meanwhile, weaker-than-forecast figures from the Confederation of British Industry (CBI) provided another slight drag on Sterling, although the impact was relatively limited.