Sterling Rallies on Rate Hike Bets Amid Energy Price Pressures

Sterling has rebounded from recent multi-month lows against both the dollar and euro as investors respond to renewed inflation pressure from energy prices and increasingly hawkish comments from Bank of England policymakers.

The pound rose 0.1% to $1.3259 against the dollar and 0.2% to 85.75 pence versus the euro on Monday, recovering from last week's lows.

Money market futures imply an 85% chance of a quarter-point rate hike at the Bank of England's November meeting, which would take rates to 4%, with four hikes priced in by mid-2025.