Sterling slipped to $1.34 after briefly climbing above $1.35 earlier in the week, its strongest level since mid-September, as a global selloff in technology shares revived demand for the safe-haven US dollar. Sentiment toward AI-related stocks weakened on mounting concerns that a potential Democratic sweep in the US midterm elections could lead to stricter regulation and slow the sector’s rapid growth.
At the same time, markets continued to assess the implications of the Bank of England’s policy decision on Thursday. The BoE raised interest rates for the first time in more than three years, and Governor Andrew Bailey signaled that additional increases may be needed unless the war in Iran is resolved. In turn, investors have sharply increased their expectations for further monetary tightening, with three more rate hikes now fully priced in by November 2027.
The central bank also cautioned that inflation could peak at 4.9% in the second quarter of 2027, while its adverse scenario foresees a steeper rise to 6.2% in the third quarter.
