LONDON, Sept 14 (Reuters) - The pound fell to its lowest in more than a month on Monday as investors flocked towards the safe-haven dollar after oil prices jumped on renewed concerns about energy supplies and worries about AI dangers knocked stock markets.
Sterling fell to $1.3474, its lowest since August 7, and was last down 0.4%.
The fall was driven by a rally in the dollar, which was also up against the euro and yen. Sterling rose slightly against the euro , with the single currency down 0.1% at 85.61 pence.
A jump in oil prices worried investors and pushed global bond yields back towards multi-year highs, with Brent crude up 3% to $108 a barrel.
Houthi strikes on the world's biggest exporter Saudi Arabia, which came after the kingdom shut down its main pipeline for bypassing the Strait of Hormuz, added to concerns about energy supplies.
A meeting between Tehran and other Gulf governments was postponed as diplomacy over the U.S.-Iran conflict appeared to falter.
Meanwhile, rising bets on a Federal Reserve rate hike on Wednesday this week have supported the U.S. dollar. The European Central Bank raised borrowing costs last week.
The Bank of England is expected to keep rates on hold on Thursday but traders now expect an increase later this year and more in 2027.
Britain's bond yields are trading at multi-decade highs as investors worry about inflation and stubbornly high levels of public debt.
Typically rising bond yields and expectations of higher interest rates in one country boost its currency, but the impact on FX markets has been limited as the moves have been global.
Data on Friday showed British gross domestic product grew 0.4% in July, far outstripping economists' forecasts that the economy would flatline.
"If growth seen in July continues into the coming months, this will likely prompt the Bank of England to consider interest rate rises," said Michael Pfister, FX analyst at Commerzbank.
Yet Pfister said markets have recently been betting more heavily on rate increases, meaning there is the potential that the BoE hikes less than expected, creating downside risks for the pound.
Reporting by Harry Robertson; Editing by Andrew Cawthorne
Source: Reuters