Sterling slipped back below the $1.34 level after hawkish comments from Federal Reserve Governor Christopher Waller and stronger‑than‑expected US inflation data boosted demand for the dollar. This pullback comes on the heels of a recent rebound in the pound, which had been supported by easing concerns over AI and Middle East tensions, as well as falling oil prices that dampened demand for the greenback and encouraged a shift into riskier assets.
The dollar strengthened on Tuesday after Waller signaled that further interest rate hikes remain possible and US consumer prices for October rose more than anticipated, reinforcing expectations of additional Federal Reserve tightening in December.
Attention is now turning to the UK’s third‑quarter GDP report, with growth forecast at 0.7%, underpinned by resilient services activity. Expectations of further Bank of England rate increases are offering some support to sterling, helping to contain its downside.
