GBP Struggles Against USD Amid Fed Rate Hike Expectations
The British Pound (GBP) continues to struggle against the US Dollar (USD), with no momentum in sight. The GBP/USD pair fell to a three-month low of 1.3228 on Wednesday, and despite some buyers entering the market, the upside potential appears limited.
Investors are favouring the dollar due to growing expectations of a Federal Reserve rate hike as early as October, while the Bank of England is not expected to change policy until November. High oil prices are also supporting the US dollar, making it an attractive safe-haven asset.
The Office for National Statistics (ONS) reported that the UK economy grew by 0.5% in the second quarter of 2026, an upward revision from the initial estimate of 0.4%. This data reinforces rising market bets for a 25-basis-point rate hike by the Bank of England at its upcoming meeting on November 5.
Chicago Fed President Austan Goolsbee said that inflation remaining above the Federal Reserve's target represents a dangerous situation, and Fed Governor Michael Barr warned that further rate increases will likely be needed to slow inflation. These hawkish comments from Fed officials are providing some support to the US dollar against the British Pound.