Sterling remains range-bound near 1.3300 as markets await the Fed’s rate decision and UK inflation data later this week.
The British pound traded in a tight range below 1.3300 on Tuesday, with a session span of under 40 pips, marking its second consecutive day of minimal movement. The lack of volatility reflects market focus on upcoming central bank decisions, including the Federal Reserve’s rate announcement on Wednesday and the UK’s inflation report later this week.
Rate futures show a 30% chance of a Fed hike this month, down from 36% over the weekend, while odds of at least one increase by December exceed 91%. The Dollar Index remains near a five-week high, supported by expectations of prolonged U.S. tightening, overshadowing the Bank of England’s anticipated steady policy.
Sterling’s subdued reaction suggests traders view the Fed’s decision as the primary driver for near-term currency moves, with the UK’s inflation data unlikely to shift rate expectations significantly.