Pound Plunges to Three-Month Low as US Dollar Surges
The British pound has hit a three-month low against the US dollar, falling to 1.3203 on Friday.
The strong US dollar and expectations of further Federal Reserve rate hikes are putting pressure on the pound.
Bank of England Deputy Governor Clare Lombardelli said that interest rates may need to rise further if energy prices remain high, unless the economy shows clear signs of weakness.
However, there is disagreement within the Bank of England's Monetary Policy Committee (MPC), with some members taking a more dovish stance. MPC member Swati Dhingra believes that inflation expectations do not yet pose a serious threat.
Markets are pricing in a high probability of a 25-basis-point Bank of England rate hike in November, but this has yet to provide meaningful support for the pound as the US dollar continues to strengthen.