Sterling Slumps as Hawkish Comments Offset Market Mood

The British Pound has retreated by 0.17% on Monday as the US Dollar trades in the green following last week's Fed rate hike, which widened the interest rate differential between the US and the UK.

Despite a positive market mood that usually underpins the GBP/USD pair, hawkish comments from Chicago Fed President Austan Goolsbee dented appetite for Sterling. He said that the Fed can't ignore repeated and consistent supply shocks and must respond in a way that may cause economic hardship.

Goolsbee's comments come after the Fed increased rates to 3.75%-4% for the first time in three years and opened the door to further tightening. The Bank of England (BoE) held rates steady at 3.75% on a 6-3 vote, even though the board recognized that the continuation of the US-Iran conflict could exert upward pressure on inflation.

The economic docket in the US and the UK would be scarce, led by the release of Flash PMIs and central bank speakers. The agenda will include the Trump-Xi summit starting on Thursday, September 23.