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Pound trades flat near 1.3300 as Fed and BoE events loom

Sterling is stuck in a sub-40 pip range after rate futures trimmed the odds of a July Fed hike to just over 30%, while tightening odds rose further out to September and December.

Reported · Written up by our desk · Major Pairs

The British pound spent Tuesday largely unchanged near 1.3300, with the session range staying under 40 pips, according to FXStreet. The move comes after a second straight day of near-total inertia beneath a level that required weeks of trading to breach.

FXStreet added that the currency’s stillness reflects a week crowded with policy signals, including two central bank decisions and the Federal Reserve’s preferred inflation gauge all within three days. The Federal Open Market Committee is set to deliver its decision at 18:00 GMT Wednesday, followed by a press conference 30 minutes later, and rate futures show the odds of a hike at just over 30%, down from just under 36% at the weekend.

While the near-term odds were trimmed, FXStreet said the tightening profile was pushed further out, with cumulative odds of at least one hike running above 76% by the September meeting and above 91% by December. It also noted that two or more hikes are priced at roughly 58%, leaving the US dollar largely driven by a path that does not require Wednesday’s decision to move.

FXStreet also pointed to energy and inflation timing pressure, saying crude oil fell for a third consecutive session as US and Iranian stand down stretched into a fourth day. Brent was near $84.00 and West Texas Intermediate near $79.00, about 16% below last Thursday’s peak, which it said can affect the inflation inputs that markets use ahead of central bank publications.

Latest closeWTI crude $81.23 ▼1.7%|Brent $85.92 ▼2.8%

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