Sterling dropped to its lowest level since late October as US inflation data and hawkish comments from Fed Governor Waller bolstered the Dollar, leaving the pair trading near 1.3350.
The Pound gave back all of Monday's rise, falling to just above 1.3300, its lowest since late October, after a hot October US CPI print left a December Fed hike fully priced (90% for a quarter point). A Fed hike to a 4.00% floor matching the BoE's level caps Sterling's rate advantage. Direction may shift if Thursday's UK GDP beats the 0.7% forecast.
October US consumer prices beat forecasts and Fed Governor Waller called a December hike likely, with a half-point move possible; traders price a quarter-point hike at about 90%. Higher Fed rates support the Dollar, and the article attributes the Pound's slide to a Dollar that rose on the US figures.
The Pound Sterling fell to just above 1.3300 after a hot US inflation report solidified expectations for a December 9 Federal Reserve rate hike. Markets now price a quarter-point increase at 90%, potentially lifting the Fed's floor to 4.00% and erasing the interest rate advantage previously held by the Bank of England.
October US consumer prices beat forecasts, making a December 9 Fed rate hike fully priced in, and the Dollar rose on the figures. The Pound dropped to just above 1.3300, its lowest since late October, before steadying near 1.3350.
A stronger-than-expected UK third-quarter GDP figure, due Thursday at 07:00 GMT with a forecast of 0.7% growth, would strengthen the case for another Bank of England hike, which supports the Pound.
Traders give a quarter-point December 9 hike about 90% probability and a half-point move about 10%; either would lift the Fed's floor to 4.00%.