Sterling fell to 1.3354, down 0.10% on the day on Tuesday, as hawkish comments from Federal Reserve officials lifted the dollar broadly rather than any domestic UK driver. The move came alongside data showing Britain's public borrowing overshot forecasts in August, adding pressure ahead of the government's October budget.
GBP/USD slid against the dollar on Tuesday, tracking a broader G10 move rather than reacting to news out of London. Two Fed officials set the tone: Chicago Fed President Austan Goolsbee warned that supply shocks combined with strong spending and AI-related investment could keep inflation persistent, while St. Louis Fed President Alberto Musalem argued a front-loaded, gradual approach to tightening was preferable, adding that policy remains accommodative.
Fed comments outweigh a dip in oil
According to ING's Francesco Pesole: "Hawkish Fed commentary was however the clearest driver," the FX strategist said. The dollar strength held even as Brent crude briefly slipped below $100 a barrel, a move that would normally pressure the greenback. Traders now turn to dovish-leaning Fed voices John Williams and Philip Jefferson, plus neutral non-voter Tom Barkin, all due to speak Tuesday, with only thin US data — weekly ADP jobs figures and the Richmond Fed manufacturing index — on the calendar.
UK borrowing overshoots ahead of the budget
Adding to the backdrop, Britain's public sector net borrowing came in at £18.3 billion in August, above all estimates in a Reuters poll, which had pointed to £15.5 billion, the ONS said. The April-August deficit stood at £77.3 billion, £8.1 billion above the OBR forecasts underpinning finance minister John Healey's tax and spending plans, ahead of his October 28 budget.
BoE rate path stays in focus
Markets are pricing in about a 75% chance of a Bank of England rate hike in November and 92 basis points of tightening by June, while ING economists still expect no hike and maintain a bearish GBP view.
Source: Investing.com
Trading involves risk.
Risk Disclaimer
