GBP Plummets as US Yields Rise and Fed Rate Hike Looms
The British Pound plummeted to two-month lows against the US Dollar due to rising US yields and the potential for higher interest rates by the Federal Reserve. The GBP/USD pair is currently trading at 1.3492, down 0.23% from its earlier losses.
Investors are bracing themselves for the Fed's decision on September 16, with a 93% chance of a rate hike, according to Prime Terminal. This has led to increased bets that the Fed will increase rates from 3.50%-3.75% to 3.75%-4%, benefiting the Greenback.
The Bank of England is expected to keep its interest rate at 3.75% following last week's GDP figures, which showed a stronger-than-expected growth in July. The widening interest rate differential puts the US Dollar ahead, and experts expect further decline in GBP/USD.