GBP Weakens Ahead of Fed Rate Hike Bets and BoE Decision

The British Pound (GBP) has weakened to near 1.3505 against the US Dollar (USD) in early European trading on Monday, as investors speculate about potential rate hikes from the Federal Reserve (Fed).

Traders are increasingly betting on a quarter-point rate hike at the Fed's September meeting, with nearly 86.7% of financial markets pricing it in, up from 72% before the US Personal Consumption Expenditures (PCE) data was released.

The BoE interest rate decision is scheduled for Thursday, but economists expect the central bank to hold rates at 3.75%. BoE Governor Andrew Bailey has recently stated that raising interest rates is not a foregone conclusion, and that the Bank will consider economic developments before making a decision.