Pound Tumbles to Three-Month Low as Fed-BoE Divergence Widens

The pound has fallen to a three-month low against the U.S. dollar, with the GBP/USD rate currently trading at just 0.5% lower than its Q3 average.

This decline came despite solid gains in July and August, which were subsequently unwound in September as the U.S. dollar staged a powerful recovery.

The pound also weakened against several major peers, including the Japanese yen, Australian dollar, and Canadian dollar, but rose modestly against the euro, New Zealand dollar, and Swiss franc.

The Bank of England's policy divergence from the Federal Reserve continues to support the U.S. dollar, with markets pricing in significant tightening from the BoE between now and July 2027.