Pound Falters Amid Labour Market Woes and Budget Risks

The British Pound is facing a fragile labour market and growth risks from upcoming budget talks, which may cloud the Bank of England's (BoE) plans for interest rate hikes.

Rising oil prices have sharply lifted UK rate expectations, with markets now discounting four BoE hikes by mid-2027 versus just over one in June.

However, Commerzbank's Michael Pfister argues that the weak labour market and growth risks may make such tightening unrealistic.