Sterling set for biggest weekly drop since September

Sterling Set for Largest Weekly Decline Since September on US Dollar Strength

By Javi West Larrañaga

Market Overview and Drivers of Sterling's Decline

Nov 13 (Reuters) - 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 Performance Against the Dollar

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.

Impact of US Dollar Strength

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 Data and Bank of England Policy

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.

Upcoming British Inflation Data

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.

Expert Commentary on Future Rate Decisions

"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."

US Producer Prices and Short-Term Outlook

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.

Sterling's Performance Against the Euro

Meanwhile, sterling edged stronger to 83.55 pence per euro, trading around its firmest since May 2025.

(Editing by Timothy Heritage)