Sterling gains as US inflation data fuels Fed rate hold expectations, while UK economic data looms this week.
The British Pound climbed 0.14% to 1.3552 against the US Dollar on Monday, recovering from daily lows of 1.3524. Softer US inflation data last week weighed on Treasury yields, reinforcing bets the Federal Reserve will pause rate hikes in September.
Investors now see a 69% chance of unchanged rates in September, while December odds favor a 25-basis-point hike. UK economic growth in June exceeded estimates, but focus shifts to upcoming jobs and inflation data. The ILO Unemployment Rate is expected to dip to 4.8%, while July’s Claimant Count Change is projected at 11.2K.
UK CPI is forecast to rise 0.3% month-over-month in July, with annual inflation seen at 2.9%. Core inflation is expected to ease slightly to 2.5% year-over-year.