Pound Slips as Hawkish Fed Comments Boost Dollar Strength

The British pound slipped against the US dollar on Tuesday as hawkish comments from Federal Reserve officials boosted dollar strength. The EUR/USD pair also eased, with sterling falling to 1.3354, down 0.10% on the day, and the euro slipping to 1.1454, down 0.11%, as of 05:02 ET (09:02 GMT). Francesco Pesole, FX strategist at ING, said 'hawkish Fed commentary was however the clearest driver.'

Fed officials Austan Goolsbee and Alberto Musalem warned that supply shocks combined with strong spending and AI-related investment could keep inflation persistent. Their comments supported front-end USD rates, even as oil prices briefly slipped below $100/bbl. The markets now turn to dovish-leaning Fed voices John Williams and Philip Jefferson, alongside neutral non-voter Tom Barkin, all due to speak Tuesday.

The Bank of England's (BoE) November rate hike is still priced in at 75%, with the UK's public sector net borrowing coming in at £18.3 billion in August, above estimates. The BoE economists expect no hike, maintaining a bearish GBP outlook. ING expects just one more hike from the ECB and Fed this year, supporting a 1.160 year-end EUR/USD forecast.