Pound Rises as Dollar Takes Breather Before US Inflation Data
The British pound rose against the United States dollar on Tuesday as traders booked profits after the greenback reached its highest level in more than a year before key US inflation data. Higher oil prices, driven by renewed fighting between the United States and Iran in the Gulf, limited sterling's gains because Britain's imported energy dependence keeps inflation pressures elevated. Markets expect US consumer inflation to ease to 3.8% in June from 4% in May, while geopolitical tensions reinforced expectations for one Federal Reserve rate increase and two Bank of England hikes. "Today's US June CPI release shouldn't severely dent markets' hawkish tendency," wrote ING strategists in a Tuesday note. Investors also monitored Britain's political transition as Andy Burnham prepared to succeed Keir Starmer on July 20, while expected finance minister Ed Miliband's spending stance unsettled gilt markets over fiscal stability concerns. At the time of writing, GBP/USD was trading at 1.3383, up 0.28%, while the United Overseas Bank predicted earlier in the day that "there is scope for GBP to dip below 1.3340 and test 1.3320."
The British pound rose against the United States dollar on Tuesday as traders booked profits after the greenback reached its highest level in more than a year before key US inflation data.
Higher oil prices, driven by renewed fighting between the United States and Iran in the Gulf, limited sterling's gains because Britain's imported energy dependence keeps inflation pressures elevated.
Markets expect US consumer inflation to ease to 3.8% in June from 4% in May, while geopolitical tensions reinforced expectations for one Federal Reserve rate increase and two Bank of England hikes. "Today's US June CPI release shouldn't severely dent markets' hawkish tendency," wrote ING strategists in a Tuesday note.
Investors also monitored Britain's political transition as Andy Burnham prepared to succeed Keir Starmer on July 20, while expected finance minister Ed Miliband's spending stance unsettled gilt markets over fiscal stability concerns.
At the time of writing, GBP/USD was trading at 1.3383, up 0.28%, while the United Overseas Bank predicted earlier in the day that "there is scope for GBP to dip below 1.3340 and test 1.3320."