Pound Rises Amid Rate Hike Bets and Soaring Oil Prices

The British pound (GBP) has risen to its highest level since August 29, despite increasing tensions in the Middle East and rising oil prices. The surge in oil prices above $100 a barrel for the first time since July has added pressure to an economy heavily dependent on imported energy.

Investors are pricing in at least two Bank of England (BoE) rate hikes by March next year, with a 40% probability of a third. This is in contrast to expectations of only two Federal Reserve rate hikes over the same period.

ING FX strategist Francesco Pesole said that poor price action for the dollar persisted before the U.S. Treasury announced a $6 billion long-term bond buyback, which could help create a better environment for the dollar.