Pound Poised for Monthly Gains Amid Rate Hike Expectations

The British pound is poised to end the month with gains against both the US dollar and the euro, despite ongoing uncertainty in energy markets. This comes as investors weigh expectations of higher UK borrowing costs and a more stable domestic political landscape.

The pound slipped 0.2% on Friday to $1.344 but remains on track for a monthly gain of over 1%. Money markets are currently pricing in at least one 25-basis-point rate hike by the end of the year, following the Bank of England's reassurance that inflation is under control.

The UK remains more reliant on energy imports than its neighboring economies, leaving it vulnerable to sharp moves in oil prices. Brent crude futures rose about 1% on Friday amid Middle East tensions, with investors assessing the impact of recent developments in the region.