Sterling slides as oil surge lifts dollar and markets price Fed hike

Sterling slides as oil surge lifts dollar and markets price Fed hike

The pound fell to a one-month low as higher oil prices, energy-supply concerns, and rising expectations of a Federal Reserve rate hike lifted the dollar.

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By Editorial Team
Edited by Estefano Gomez

Sterling fell to a one-month low on Monday as investors moved into the safe-haven dollar after oil prices jumped and renewed concerns about energy supplies weighed on markets.

The pound fell to $1.3474, its lowest level since August 7, and was last down 0.4%. The dollar also strengthened against the euro and yen, while sterling edged higher against the euro, with the single currency down 0.1% at 85.61 pence.

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Brent crude rose 3% to $108 a barrel after Houthi strikes on Saudi Arabia and the shutdown of the kingdom’s main pipeline bypassing the Strait of Hormuz heightened concerns about energy supplies. 

A meeting between Tehran and other Gulf governments was postponed as diplomacy over the US-Iran conflict appeared to falter.

Rising expectations that the Federal Reserve will raise interest rates on Wednesday also supported the dollar. The European Central Bank raised borrowing costs last week, while the Bank of England is expected to hold rates on Thursday. Traders now expect a UK rate increase later this year and further hikes in 2027.

British bond yields are at multi-decade highs as investors weigh inflation and high public debt. July data showed the UK economy grew 0.4%, beating forecasts for no growth, but Commerzbank analyst Michael Pfister said markets may already be pricing in more rate increases than the Bank of England ultimately delivers, creating downside risks for the pound.

Disclosure: This article was edited by Editorial Team. For more information on how we create and review content, see our Editorial Policy.
FINANCE
Sterling slides as oil surge lifts dollar and markets price Fed hike
Sterling slides as oil surge lifts dollar and markets price Fed hike

The pound fell to a one-month low as higher oil prices, energy-supply concerns, and rising expectations of a Federal Reserve rate hike lifted the dollar.

By Editorial Team
Edited by Estefano Gomez

Share

Add us on Google

Sterling fell to a one-month low on Monday as investors moved into the safe-haven dollar after oil prices jumped and renewed concerns about energy supplies weighed on markets.

The pound fell to $1.3474, its lowest level since August 7, and was last down 0.4%. The dollar also strengthened against the euro and yen, while sterling edged higher against the euro, with the single currency down 0.1% at 85.61 pence.

Advertisement

Brent crude rose 3% to $108 a barrel after Houthi strikes on Saudi Arabia and the shutdown of the kingdom’s main pipeline bypassing the Strait of Hormuz heightened concerns about energy supplies. 

A meeting between Tehran and other Gulf governments was postponed as diplomacy over the US-Iran conflict appeared to falter.

Rising expectations that the Federal Reserve will raise interest rates on Wednesday also supported the dollar. The European Central Bank raised borrowing costs last week, while the Bank of England is expected to hold rates on Thursday. Traders now expect a UK rate increase later this year and further hikes in 2027.

British bond yields are at multi-decade highs as investors weigh inflation and high public debt. July data showed the UK economy grew 0.4%, beating forecasts for no growth, but Commerzbank analyst Michael Pfister said markets may already be pricing in more rate increases than the Bank of England ultimately delivers, creating downside risks for the pound.

Disclosure: This article was edited by Editorial Team. For more information on how we create and review content, see our Editorial Policy.