Weaker-than-expected US producer price data fuels speculation the Federal Reserve may pause rate hikes, lifting the British pound against the dollar.
The British pound climbed against the US dollar after US producer inflation data undershot expectations, reinforcing signs of easing price pressures. GBP/USD rose to 1.3503, up 0.2% on the day.
Producer prices in the US either matched or fell below estimates, continuing a disinflationary trend. Markets had anticipated stronger readings, which could have supported further Federal Reserve tightening. The data follows last week’s softer consumer inflation figures.
Investors are now pricing in a higher probability of a Fed pause in September, reducing demand for the dollar and supporting sterling.