26.08.202608:35:28UTC+00Pound Holds Near Six-Month High as BoE Rate Hike Bets Persist

The British pound traded above $1.36, hovering near its strongest level since mid-February, as markets continued to factor in Bank of England rate hikes this year. This came despite easing oil prices and persistent concerns over stubborn inflation and rising public debt. Brent crude fell for a third consecutive session after Iran held talks with Oman on reopening the Strait of Hormuz, with Oman’s foreign ministry indicating that a temporary corridor could be announced soon. Unverified reports also suggested that the US and Iran could reach a new ceasefire agreement in the coming days.

Money markets are still pricing in at least 25 basis points of additional BoE tightening by year-end, following data showing UK inflation accelerated to 2.9% in July, its highest reading since March, with further increases anticipated toward the end of the year. Investors will also be watching the government’s first budget under Andy Burnham in October. On Tuesday, the UK announced plans to allocate £10 billion to lower-cost rental housing, with a particular focus on London.