British Pound Drops as Fed Governor Signals Rate Hikes

The British pound declined against the US dollar on November 10 and 11, 2026, falling from highs of 1.3460 to 1.3380. The currency's retreat was driven by a strengthening US dollar, fueled by October inflation data showing headline consumer prices rose 0.4%, exceeding the 0.3% forecast, while core prices increased 0.3% against a 0.2% expectation.

Christopher Waller, a Governor of the Federal Reserve, intensified market pressure by advocating for additional interest rate hikes. Waller indicated support for a December increase of at least 25 basis points, with the possibility of a 50-basis-point move. These signals pushed market bets for a December hike to approximately 85%.

Sterling also eased slightly against the euro to 83.51 pence, retreating from a 20-month high previously supported by Bank of England rate increases. Analysts from Scotiabank and MUFG noted that while central bank policy is currently driving dollar strength, potential diplomatic progress toward a US-Iran deal to lower energy prices could eventually reduce the pressure on the Federal Reserve to continue hiking rates. Investors remain focused on Britain's third-quarter gross domestic product data, with economists forecasting 0.7% growth.