Sterling Slumps Amid Oil Price Spikes and Rate Hike Fears

The pound sterling has been struggling in recent days due to concerns over energy supply disruptions and uncertainty about interest rate hikes. On Monday, it hit its lowest point in over a month, falling to $1.3474 against the dollar.

The decline was largely driven by the strengthening of the dollar against other major currencies, including the euro and yen. However, sterling did manage to hold its ground against the euro.

The sudden spike in oil prices has fueled fears about energy supply disruptions, with Brent crude rising 3% to $108 per barrel. This increase was exacerbated by Houthi strikes on Saudi Arabia and diplomatic efforts between Tehran and Gulf nations faltering.

Meanwhile, expectations of a Federal Reserve rate hike have bolstered the dollar, as the European Central Bank increased borrowing costs last week. Although the Bank of England is expected to maintain its rates this Thursday, market speculation suggests possible future increases.