2026.09.1013:32:59UTC+00Pound Slips as Dollar Gains and BoE Hike Bets Rise

The British pound slipped to around $1.35 as the US dollar strengthened, even as expectations grew for additional Bank of England interest rate hikes amid rising inflation concerns. Climbing energy prices, together with the European Central Bank’s recent rate increase and a more hawkish stance on inflation, put further upward pressure on UK yields. Brent crude rose above $100 per barrel, while UK natural gas prices hit their highest level since late 2022, as escalating tensions in the Middle East intensified worries over energy supplies. Markets are now fully pricing in four BoE rate hikes by the end of 2027, despite Governor Andrew Bailey’s efforts to temper expectations by insisting that another increase is not a foregone conclusion and that future policy moves will hinge on evolving economic and geopolitical conditions. At the same time, the dollar gained additional support after stronger-than-expected US PPI data pushed the implied probability of a Federal Reserve rate hike next week to above 70%.