The British pound holds near session highs despite a partial US dollar rebound after Thursday’s intervention-driven selloff.
The British pound traded virtually unchanged at 1.3458 against the US dollar on Friday, paring earlier losses as the greenback recovered from a 30-day low. The US Dollar Index (DXY) rebounded after Thursday’s intervention, which had pushed it sharply lower, though it remains on track for its worst weekly performance since early April 2026, down over 1.30% for the week.
US consumer sentiment improved in July, with the University of Michigan’s index rising to 55.2 from a preliminary 54.4, while inflation expectations held steady at 4.2% for one year and 3.3% for five years. However, weaker-than-expected Q2 GDP growth and a 0.1% decline in June’s core PCE inflation reduced expectations for a September Fed rate hike, with markets pricing in just 23 basis points of tightening by year-end.
Fed dissenters, including Dallas Fed’s Lorie Logan, reiterated concerns over inflation risks, but the lack of forward guidance from Fed Chair Kevin Warsh kept traders cautious. Meanwhile, Bank of England tightening risks continue to support the pound, limiting downside pressure.