The pound fell to 1.3292 by mid-morning Wednesday, down 0.40%, as the dollar broadly strengthened on renewed Federal Reserve hawkishness.
The decline followed no meaningful UK-specific catalysts; neither significant domestic data nor Bank of England commentary featured during the session. Instead, broader dollar resilience pushed Sterling lower alongside a 0.31% drop in the euro to 1.1414 and the U.S. Dollar Index reaching 101.
Richmond Fed President Thomas Barkin said a single rate increase may prove insufficient to bring inflation under control, adding that a resilient labor market should continue supporting consumer spending.
The comments reinforced market pricing that the Federal Reserve will maintain a restrictive stance longer than peers. Francesco Pesole, an FX strategist at ING, noted the dollar "continues to show very good resilience to lower energy prices and a risk-friendly environment," calling it "another sign that the Fed story is dominant, and the hawkish Fedspeak is enough to keep USD in demand."
U.S. labor-market indicators also underpinned the greenback. Initial jobless claims remained below 200,000, the nonfarm-payrolls consensus built around 80,000-100,000, and ADP reported an uptick in private hiring in early September.
On the European side, the eurozone composite purchasing-managers index rose to 53.1 in September from 52.0, marking its highest level in three years. The services component jumped to 53.0 from 51.6, and Germany's services PMI climbed to 52.9 from 49.7, even as France's factory PMI drifted close to the 50 threshold separating growth from contraction. ING said input and output prices in the eurozone rose at their fastest pace in four months.
Pesole said the data makes it harder for the most dovish ECB policymakers to rule out another rate hike. He added that when oil prices fall, markets may price out ECB tightening faster than Fed tightening, making EUR/USD "start to look a tad cheap" with little technical justification for fading the current decline before the 1.140-1.142 area. ING sees the dollar index target of 101 as achievable in the near term.
ING forecast both the Fed and ECB are expected to hold their next policy moves until December.
