GBP/USD Hits 12-Week Low as Strong US Data Reignites Rate Hike Bets

The Pound to US Dollar exchange rate has reached a 12-week low of around 1.3250 due to strong US business surveys reinforcing expectations of further Federal Reserve tightening.

The break below 1.3300 has weakened Sterling's technical position, while the Dollar continues to draw support from rising US yields and mounting expectations of rate hikes in both October and December.

US data showed a 52-month high for the manufacturing index at 57.0 and a 59-month high for the services-sector index at 58.7, indicating strong growth but also severe supply chain bottlenecks.

Markets are now pricing in over a 50% chance that the Fed will increase rates in both October and December, which would reinforce positive rate differentials for the US currency.