Sterling Struggles Amid Energy Supply Concerns and Rate Uncertainty

Sterling has hit a one-month low against the dollar as oil prices surge, raising concerns over energy supply. The dollar's rally extended against major currencies, influenced by Houthi strikes and geopolitical tensions. While UK's GDP shows growth, uncertainties over rate hikes weigh down Sterling's performance.

On Monday, Sterling fell to its lowest point in more than a month, as global investors sought refuge in the safe-haven dollar amid surging oil prices that revived fears about energy supply disruptions. The pound dropped to $1.3474, marking its weakest position since August 7, and was last noted down 0.4%.

This decline resulted from the dollar strengthening against both the euro and the yen, though Sterling held slightly against the euro. Worries about energy supplies intensified due to a sudden spike in oil prices, with Brent crude rising by 3% to $108 per barrel, exacerbated by Houthi strikes on Saudi Arabia. Diplomatic efforts between Tehran and Gulf nations also faltered.

Meanwhile, expectations of a Federal Reserve rate hike have bolstered the dollar, as the European Central Bank incremented borrowing costs last week. While the Bank of England is anticipated to maintain its rates this Thursday, market speculation hints at future increases. Nonetheless, Britain's positive GDP growth suggests possible BOE interest rate hikes, despite prevailing market skepticism.