Sterling Slumps to Five-Week Low Ahead of Fed and BoE Decisions

Sterling has fallen to a five-week low against the US dollar as markets wait for policy decisions from both the Federal Reserve and the Bank of England. The GBP/USD pair tested its lowest point at 1.3464 before rebounding slightly, but still remained down by 0.23%. The pair is expected to remain volatile in the lead-up to these key events.

The US dollar has been bolstered by a recent rise in the US 10-year Treasury yield, which climbed above 4.2% recently. This increase in yields has put pressure on the pound sterling and pushed it lower against its major counterparts.

Market analysts are warning of heightened volatility in GBP/USD markets as investors await the rate decisions from both central banks. With an 88% probability of a 25-basis-point Fed rate hike, any unexpected pause or hawkish surprise will likely trigger sharp swings in the currency market.