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Sterling stays near 1.3300 as Fed and BoE loom

GBP is trading in a tight 30-pip range, with the dollar gaining on a safety bid amid recent equity weakness and Fed hike pricing around 36% for Wednesday.

Reported · Written up by our desk · Major Pairs

The British pound has traded around 1.3300 in the New York morning, essentially flat, with the day’s range running barely 30 pips between roughly 1.3250 and just above 1.3300. FXStreet notes this is the narrowest daily swing in weeks, arriving about a day before a Federal Reserve decision and two days before a Bank of England decision tied to a fresh Monetary Policy Report.

The currency remains below the converged 50-day and 200-day exponential moving averages, which sit just under 1.3400 and are capping rallies from beneath. FXStreet also says sterling has given back about two and a half cents since a mid-July peak near 1.3550, with the retreat described as orderly rather than driven by a new catalyst.

FXStreet links the broader backdrop to dollar strength, saying the Dollar Index is near a one-month high around 101.50 and the dollar is near 164.00 versus the yen. It also points to the dollar absorbing a safety bid after an equity rout that took Korean shares down nearly 11% and the Nikkei 225 down close to 4%.

Into Wednesday, rate futures imply odds of a Fed hike near 36%, unchanged from mid-last week, while at least one increase is about 80% priced by September. FXStreet adds that Tuesday US data was soft, but the dollar did not respond, with private hiring averaging over the past four weeks slowing again and July consumer confidence at 90.8 versus expectations nearer 92.

Latest closeNikkei 225 64,611.15 ▼2.7%|Dollar index 101.51 ▲0.0%

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