Pound Falls Toward Three-Month Low Amid Hawkish Comments

The British pound has continued its downward trend, falling toward $1.32, its lowest level in three months. This decline is attributed to a combination of factors, including fresh comments from Bank of England policymakers and a stronger US dollar.

Rising oil prices have also weighed on the economic outlook, leading BoE Deputy Governor Clare Lombardelli to suggest that interest rates may need to rise if energy prices remain elevated, unless there is clear evidence of a weakening economy. However, MPC member Swati Dhingra, one of the more dovish policymakers, has stated that inflation expectations are not yet a source of concern.

The markets continue to price in a solid chance of a 25-basis-point BoE rate hike in November, following hawkish comments from policymakers and stronger-than-expected PMI data in the US. This increase in expectations for further Federal Reserve rate hikes has contributed to the strengthening dollar.