Sterling set for biggest weekly drop since September

The pound was unchanged ​on Friday and set for its ​biggest weekly drop since September, ‌as ​rising US yields and hawkish comments from several Federal Reserve officials helped prop up the dollar near 19-month highs.

Sterling ‌was up 0.05% at $1.323 and on track for its fourth successive negative session against the dollar, while Treasury yields rose after President Donald Trump said the United States does not need ‌a deal with Iran. The weekly fall was mostly down to the dollar ‌side of the equation, with the greenback having risen steadily in recent days on hotter-than-expected inflation data and statements from key Fed policymakers which reinforced expectations of further interest-rate tightening.

UK economic growth data matched expectations ⁠on ​Thursday and supported the ⁠Bank of England's decision last week to raise interest rates, with the markets currently assigning a roughly 85% ⁠chance of another rate hike in December. British inflation data next Friday is likely to ​come in above consensus and sway the market even more towards the likelihood of a ⁠25-basis-point rate increase at the next meeting, said Nick Rees, head of macro research at Monex.

"But ⁠we ​think they will want to stay on hold in 2027," Rees added. "This is driven by our view on some of the growth and fiscal risks coming to ⁠the UK economy." According to Rees, data on October US producer prices later on Friday ⁠should not significantly ⁠impact money markets and the absence of further catalysts should provide some stability for the pound.

Meanwhile, sterling edged stronger to 83.55 pence ‌per euro , ‌trading around its firmest since May 2025. (Editing ​by Timothy Heritage)