London Daily

Focus on the big picture.
Monday, Oct 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
Ex-Microsoft Engineer Confirms Famous Windows XP Key Was Leaked Corporate License, Not a Hack
China’s lesson for the US: it takes more than chips to win the AI race
Australia Faces Demographic Risk as Fertility Falls to Record Low
California County Reinstates Mask Mandate in Health Facilities as Respiratory Illness Risk Rises
Israel and Hamas Agree to First Phase of Trump-Brokered Gaza Truce, Hostages to Be Freed
French Political Turmoil Elevates Marine Le Pen as Rassemblement National Poised for Power
China Unveils Sweeping Rare Earth Export Controls to Shield ‘National Security’
The Davos Set in Decline: Why the World Economic Forum’s Power Must Be Challenged
France: Less Than a Month After His Appointment, the New French Prime Minister Resigns
Hungarian Prime Minister Viktor Orbán stated that Hungary will not adopt the euro because the European Union is falling apart.
Sarah Mullally Becomes First Woman Appointed Archbishop of Canterbury
Mayor in western Germany in intensive care after stabbing
Australian government pays Deloitte nearly half a million dollars for a report built on fabricated quotes, fake citations, and AI-generated nonsense.
US Prosecutors Gained Legal Approval to Hack Telegram Servers
Macron Faces Intensifying Pressure to Resign or Trigger New Elections Amid France’s Political Turmoil
Standard Chartered Names Roberto Hoornweg as Sole Head of Corporate & Investment Banking
UK Asylum Housing Firm Faces Backlash Over £187 Million Profits and Poor Living Conditions
UK Police Crack Major Gang in Smuggling of up to 40,000 Stolen Phones to China
BYD’s UK Sales Soar Nearly Nine-Fold, Making Britain Its Biggest Market Outside China
Trump Proposes Farm Bailout from Tariff Revenues Amid Backlash from Other Industries
FIFA Accuses Malaysia of Forging Citizenship Documents, Suspends Seven Footballers
Latvia to Bar Tourist and Occasional Buses to Russia and Belarus Until 2026
A Dollar Coin Featuring Trump’s Portrait Expected to Be Issued Next Year
Australia Orders X to Block Murder Videos, Citing Online Safety and Public Exposure
Three Scientists Awarded Nobel Prize in Medicine for Discovery of Immune Self-Tolerance Mechanism
OpenAI and AMD Forge Landmark AI-Chip Alliance with Equity Option
Munich Airport Reopens After Second Drone Shutdown
France Names New Government Amid Political Crisis
Trump Stands Firm in Shutdown Showdown and Declares War on Drug Cartels — Turning Crisis into Opportunity
Surge of U.S. Billionaires Transforms London’s Peninsula Apartments into Ultra-Luxury Stronghold
Pro Europe and Anti-War Babiš Poised to Return to Power After Czech Parliamentary Vote
Jeff Bezos Calls AI Surge a ‘Good’ Bubble, Urges Focus on Lasting Innovation
Japan’s Ruling Party Chooses Sanae Takaichi, Clearing Path to First Female Prime Minister
Sean ‘Diddy’ Combs Sentenced to Fifty Months in Prison Following Prostitution Conviction
Taylor Swift’s ‘Showgirl’ Launch Extends Billion-Dollar Empire
Trump Administration Launches “TrumpRx” Plan to Enable Direct Drug Sales at Deep Discounts
Trump Announces Intention to Impose 100 Percent Tariff on Foreign-Made Films
Altman Says GPT-5 Already Outpaces Him, Warns AI Could Automate 40% of Work
Singapore and Hong Kong Vie to Dominate Asia’s Rising Gold Trade
Trump Organization Teams with Saudi Developer on $1 Billion Trump Plaza in Jeddah
Manhattan Sees Surge in Office-to-Housing Conversions, Highest Since 2008
Switzerland and U.S. Issue Joint Assurance Against Currency Manipulation
Electronic Arts to Be Taken Private in Historic $55 Billion Buyout
Thomas Jacob Sanford Named as Suspect in Deadly Michigan Church Shooting and Arson
Russian Research Vessel 'Yantar' Tracked Mapping Europe’s Subsea Cables, Raising Security Alarms
New York Man Arrested After On-Air Confession to 2017 Parents’ Murders
U.S. Defense Chief Orders Sudden Summit of Hundreds of Generals and Admirals
Global Cruise Industry Posts Dramatic Comeback with 34.6 Million Passengers in 2024
Trump Claims FBI Planted 274 Agents at Capitol Riot, Citing Unverified Reports
India: Internet Suspended in Bareilly Amid Communal Clashes Between Muslims and Hindus
×