Pound Plummets to New Low as Fed Officials Hint at More Rate Hikes
The British Pound has set a new September low against the US Dollar, falling to just above 1.3300 on Tuesday following comments from Fed officials that suggest another interest rate hike may be on the horizon before the end of the year.
According to projections published with the decision, 16 out of 18 Fed officials expect at least one more increase this year, which would further widen the gap between the UK's Bank Rate and the Fed's range.
The current Bank Rate in the UK is 3.75%, an eighth of a point below the midpoint of the Fed's 3.75-4.00% range, making US Dollar deposits more attractive to investors than Pound Sterling ones.
Wednesday's release of the S&P Global flash surveys of UK purchasing managers may also impact the Pound's value, as the services reading is expected to show a decline from 52.5 to 52, which could argue in favor of a UK interest rate hike in November.