Sterling fell below $1.36 after retreating from six-month highs reached last week, as declining Brent crude prices eased inflation concerns and prompted markets to push expectations for the next Bank of England rate hike into 2027 from late 2026. LSEG data showed about 24 basis points of tightening priced by December and 36 basis points by February 2027, while less than 4 basis points was priced for the BoE’s September meeting, implying roughly a 15% chance of a hike. Most economists expect rates to remain at 3.75% this year. UK inflation rose to 2.9% in July because of higher household energy bills and may increase further toward year-end, although the labour market remained subdued. Investors are also watching gilt yields, the government’s October budget under Andy Burnham, proposed £10 billion spending on lower-cost rental housing and Fed Chair Kevin Warsh’s Jackson Hole speech for clues on global rates and fiscal risks.