Sterling Crashes Amid Oil Price Surge and Fed Rate Hike Expectations

The British pound plummeted to its lowest level in over a month against the US dollar on Tuesday, weighed down by soaring oil prices and anticipation of a Federal Reserve rate hike.

Oil prices surged more than 2% to $108.2 per barrel due to concerns over supply disruptions after Houthi forces launched attacks on Saudi Arabia's energy infrastructure, leaving its East-West Pipeline offline.

The UK is vulnerable to the impact of higher energy costs as a net oil importer, increasing the risk of energy-related inflation and putting pressure on the economy.

Despite weak labor market indicators in the UK, including pay growth near a six-year low, traders are fully pricing in a 25 basis point rate hike by year-end, according to data compiled by LSEG.