The pound recovered from multi-month lows against the dollar and euro as investors increased bets that the Bank of England (BoE) will raise interest rates to contain inflation driven partly by higher energy costs. Sterling was up 0.1% at $1.3259, after touching $1.3204 last week, but remained set for a decline of more than 2% in September as the dollar strengthened on expectations of tighter Federal Reserve policy. The pound rose 0.2% against the euro to 85.75 pence after reaching its weakest level against the single currency since July 1 on Friday. Money market futures now reflect an 85% probability of a 0.25 percentage-point BoE increase at the November meeting, taking rates to 4%, with four increases priced by the middle of next year. BoE Governor Andrew Bailey and Deputy Governor Dave Ramsden have both highlighted mounting inflation risks. Attention is also turning to Britain’s public finances before the Autumn Budget on October 28, while a planned homebuyer equity loan scheme helped lift homebuilder shares and may have attracted foreign flows into sterling.