The British Pound sets a new September low as Fed officials argue for more

The British Pound hit a new September low of just above 1.3300 against the US Dollar on Tuesday, its lowest level since late July. This decline occurred as Federal Reserve officials argued for additional rate hikes before the year's end. The US Dollar rose in response to the Fed's decision to raise interest rates on September 16, with the pound failing to regain its previous levels four times since.

The UK's Bank Rate, set by the Bank of England at 3.75%, has been higher than the Fed's range of 3.75% to 4.00% since December 2025. UK inflation was 3.1% in August, above the BoE's 2% target, and energy costs are expected to keep it higher in future quarters. Six of the Fed's 18 officials expect at least one more increase this year, while the Bank of England voted 6-3 to maintain rates on September 17.

The Pound may need a fourth vote from the Fed to see a UK rate increase. UK purchasing managers' surveys for services and manufacturing are due on Wednesday, with services growth expected to decrease while manufacturing remains flat. A weaker services reading would support the six BoE members who voted to hold rates, keeping the Dollar's advantage.

US new home sales for August, released on Thursday, showed a 10.5% drop from July. Friday's University of Michigan survey on expected inflation in a year, forecast at 4.6%, will provide further insight into the Federal Reserve's stance on rate hikes. The Pound Sterling is the world's oldest currency and the fourth most traded in foreign exchange markets, averaging $630 billion daily.

Its value is primarily influenced by the Bank of England's monetary policy decisions aimed at maintaining steady inflation around 2%.