GBP/USD Hits Five-Week Lows as Energy Prices Surge and Fed Rate Hike Fears Rise

The Pound to Dollar exchange rate (GBP/USD) has plummeted to five-week lows around 1.3465 due to rising energy prices and a strengthening US dollar.

The surge in Brent crude oil prices to nearly $105 per barrel, coupled with increasing US Treasury yields close to 5%, has led markets to price an almost 90% probability of a Fed rate hike.

This has left the Pound under pressure below 1.35. Scotiabank remains cautious about sustained losses for GBP/USD, citing further support at 1.3450 and 1.3420.

Central bank meetings this week will be crucial, with the Federal Reserve and Bank of England rate decisions on Wednesday and Thursday respectively.