Pound Retreats as Elevated Prices Fuel Rate Hike Bets

The British Pound retreated by 0.39% as the US Dollar made a recovery after a report showed that prices remained elevated, increasing the chances of a rate hike by the Federal Reserve.

The Core Personal Consumption Expenditures (PCE) Price Index in July was unchanged from June's 3.3% YoY and above estimates of 3.6%, while the US economy grew at a 1.5% annual pace in Q2 2026 as expected.

The US Dollar Index (DXY) rose by 0.27% to 99.17, with US Treasury yields increasing four basis points to 4.664%. Money markets had priced in a 39% chance of a rate hike in the September meeting and 74% for a 25-bps increase in December.