London Daily

Focus on the big picture.
Saturday, Sep 13, 2025

Sterling tumbles more than 1% vs dollar after U.S. inflation data

Sterling tumbles more than 1% vs dollar after U.S. inflation data

Sterling fell by more than 1% on Friday and was set for a second consecutive week of declines against the U.S. dollar as Britain's gloomy economic outlook left investors on edge while strong U.S. inflation data boosted the greenback.
The pound fell below $1.24 after data showed that U.S. consumer prices accelerated in May, suggesting that the Federal Reserve could continue with its 50 basis point interest rate hikes through September to combat inflation.The Bank of England is expected to raise interest rates next week for the fifth time since December, its steepest run of rate hikes in 25 years.

Prompting markets to bet on faster tightening by the BoE, British short and medium- dated government bond yields rose sharply this week after the European Central Bank signalled it would raise interest rates in July and September.

Financial markets are pricing in BoE rates hitting 2% by September and 3% by May 2023.

However, with Britain forecast to have the weakest economy in 2023 among the world's rich nations, sterling failed to gain support from hikes expectations.

"I don’t necessarily think the number of hikes priced for the BoE is necessarily reflective of what the Bank’s likeliest course of action is, therefore, it doesn’t provide much stimulus for the pound," said Simon Harvey, head of FX Analysis at Monex Europe.

"Conversely, higher expectations of the Fed funds rate are justifiable and are therefore propping up the dollar as it drives front-end Treasury rates higher," he added.

The pound slipped as much as 1.3% versus the dollar to $1.2339 at 1428, hitting its lowest in three weeks. .

It edged 0.2% lower against the euro at 85.13 pence but was heading to its best week against the weakening single currency since April.

Shaun Osborne, chief FX strategist at Scotiabank, said markets only expect a 25bps hike from the BoE next week and "a quarter-point increase should not greatly impact the pound."

"Where the main risks lie for the pound is that the bank tees up a pause in its hiking cycle in coming months that would clearly oppose the view of markets that see a 50bps hike at the August or September decisions," he added.
Newsletter

Related Articles

0:00
0:00
Close
French Debt Downgrade Piles Pressure on Macron’s New Prime Minister
US and UK Near Tech, Nuclear and Whisky Deals Ahead of Trump Trip
One in Three Europeans Now Uses TikTok, According to the Chinese Tech Giant
Could AI Nursing Robots Help Healthcare Staffing Shortages?
NATO Deploys ‘Eastern Sentry’ After Russian Drones Violate Polish Airspace
Anesthesiologist Left Operation Mid-Surgery to Have Sex with Nurse
Tens of Thousands of Young Chinese Get Up Every Morning and Go to Work Where They Do Nothing
The New Life of Novak Djokovic
The German Owner of Politico Mathias Döpfner Eyes Further U.S. Media Expansion After Axel Springer Restructuring
Suspect Arrested: Utah Man in Custody for Charlie Kirk’s Fatal Shooting
In a politically motivated trial: Bolsonaro Sentenced to 27 Years for Plotting Coup After 2022 Defeat
German police raid AfD lawmaker’s offices in inquiry over Chinese payments
Turkish authorities seize leading broadcaster amid fraud and tax investigation
Volkswagen launches aggressive strategy to fend off Chinese challenge in Europe’s EV market
ChatGPT CEO signals policy to alert authorities over suicidal youth after teen’s death
The British legal mafia hit back: Banksy mural of judge beating protester is scrubbed from London court
Surpassing Musk: Larry Ellison becomes the richest man in the world
Embarrassment for Starmer: He fired the ambassador photographed on Epstein’s 'pedophile island'
Manhunt after 'skilled sniper' shot Charlie Kirk. Footage: Suspect running on rooftop during panic
Effective Protest Results: Nepal’s Prime Minister Resigns as Youth-Led Unrest Shakes the Nation
Qatari prime minister says Netanyahu ‘killed any hope’ for Israeli hostages
King Charles and Prince Harry Share First In-Person Moment in 19 Months
Starmer Establishes Economic ‘Budget Board’ to Centralise Policy and Rebuild Business Trust
France Erupts in Mass ‘Block Everything’ Protests on New PM’s First Day
Poland Shoots Down Russian Drones in Airspace Violation During Ukraine Attack
Brazilian police say ex-President Bolsonaro had planned to flee to Argentina seeking asylum
Trinidad Leader Applauds U.S. Naval Strike and Advocates Forceful Action Against Traffickers
Kim Jong Un Oversees Final Test of New High-Thrust Solid-Fuel Rocket Engine
Apple Introduces Ultra-Thin iPhone Air, Enhanced 17 Series and New Health-Focused Wearables
Macron Appoints Sébastien Lecornu as Prime Minister Amid Budget Crisis and Political Turmoil
Supreme Court temporarily allows Trump to pause billions in foreign aid
Charlie Sheen says his father, Martin Sheen, turned him in to the police: 'The greatest betrayal possible'
Vatican hosts first Catholic LGBTQ pilgrimage
Apple Unveils iPhone 17 Series, iPhone Air, Apple Watch 11 and More at 'Awe Dropping' Event
Pig Heads Left Outside Multiple Paris Mosques in Outrage-Inducing Acts
Nvidia’s ‘Wow’ Factor Is Fading. The AI chip giant used to beat Wall Street expectations for earnings by a substantial margin. That trajectory is coming down to earth.
France joins Eurozone’s ‘periphery’ as turmoil deepens, say investors
On the Anniversary of Queen Elizabeth’s Death: Prince Harry Returns to Britain
France Faces New Political Crisis, again, as Prime Minister Bayrou Pushed Out
Murdoch Family Finalises $3.3 Billion Succession Pact, Ensuring Eldest Son’s Leadership
Big Oil Slashes Jobs and Investments Amid Prolonged Low Crude Prices
Court Staff Cover Up Banksy Image of Judge Beating a Protester
Social Media Access Curtailed in Turkey After CHP Calls for Rallies Following Police Blockade of Istanbul Headquarters
Nayib Bukele Points Out Belgian Hypocrisy as Brussels Considers Sending Army into the Streets
Elon Musk Poised to Become First Trillionaire Under Ambitious Tesla Pay Plan
France, at an Impasse, Heads Toward Another Government Collapse
Burning the Minister’s House Helped Protesters to Win Justice: Prabowo Fires Finance Minister in Wake of Indonesia Protests
Brazil Braces for Fallout from Bolsonaro Trial by corrupted judge
The Country That Got Too Rich? Public Spending Dominates Norway Election
Nearly 40 Years Later: Nike Changes the Legendary Slogan Just Do It
×