Sterling Slumps to Three-Month Low Amid Dollar Rally and Rate Hike Bets

The British pound has hit a three-month low against both the US dollar and euro, as energy price increases and expectations of further rate hikes from the US Federal Reserve drive up demand for the dollar.

The pound hovered at around $1.322 on Friday, its lowest since June 29, and dropped about 1.2% this week against the dollar, its biggest weekly loss since May.

Currency strategist Francesco Pesole from ING said the pound is likely to struggle in the coming months as it's doubtful the Bank of England will hike interest rates sharply.