Pound Falls as Oil Supply Shock Revives Inflation Fears

The British Pound's recent gains have been reversed as concerns over an oil supply shock and high inflation have resurfaced. The GBP/USD price has dropped to 1.3356, down 0.03% from its daily high of 1.3375. This decline comes despite the stronger-than-expected UK Retail Sales data, which showed a 0.5% MoM increase in August.

The oil market is experiencing volatility due to supply concerns, with West Texas Intermediate (WTI) trading at $97.34, down 3.80%. The Saudi government has informed European oil buyers that they will not provide any supplies for next month, adding to the uncertainty. This news has reignited fears of high inflation and has had a negative impact on the Pound.

The interest rate differential between the US and the UK is still favoring the Greenback, with the Fed-BoE rate differential keeping broader pressure tilted toward Sterling. However, this may not be enough to offset the current concerns over oil prices and inflation.