Sterling Squeezed by Oil Price Surge and Stronger US Dollar

The pound sterling has been stuck near its month-low value of $1.347 due to two conflicting market pressures.

On one side, a stronger US dollar is expected to rise with the Federal Reserve's rate hike, lifting most assets priced in dollars.

However, on the other side, oil prices have jumped more than 2% to $108.2 per barrel after new attacks linked to Iran-backed Houthi forces raised concerns about Middle East supply disruptions.

The UK is a net oil importer, meaning higher crude prices will worsen its trade balance and weigh on sterling.

Firm UK rate expectations may not automatically translate into a stronger currency, as markets worry that pricier energy will keep inflation sticky while also seeing growth and hiring cooling.