Pound Tumbles as Fed and BoE Rate Decisions Loom

The British pound has fallen to its lowest level since mid-August, weakening below $1.35 as the dollar remains supported ahead of the Federal Reserve's expected rate hike on Wednesday.

The Bank of England is also set to make a decision on Thursday, with markets pricing in four BoE rate hikes by mid-2027 and Goldman Sachs expecting the BoE to keep Bank Rate unchanged at 3.75% before delivering a 25-bp hike in November.

Despite this, BoE Governor Andrew Bailey has pushed back against expectations of another imminent rate hike, citing surging energy prices which have clouded the inflation outlook as oil climbs well above $100 a barrel amid renewed Middle East hostilities.