- GBP/USD edges lower on Tuesday in the early Asian session.
- The US Dollar Index remains strong near 94.40 with 0.32% gains.
- BoE’s inflation stance and Brexit concerns pull sterling lower against USD.
GBP/USD extends declines on Tuesday. The pair touched a high of 1.3674 in the previous session but failed to preserve the momentum. At the time of writing, GBP/USD is trading at 1.3591, down 0.03% for the day.
The US Dollar Index (USD), which tracks the performance of the greenback against its six major rivals, trades near 94.40 near its highest level since September, 2020. Investors stay invested in the greenback on higher inflationary worries over rising energy prices and the Fed’s tapering expectations as soon as November.
On the other hand, the British pound continues with its struggle on fear of inflation and interest rate hike bets. The Bank of England (BOE) and members of the Monetary Policy Committee (MPC) suggested a reversal in last year’s interest rate cuts at any point in the near future though unlikely before the early months of 2022 to neutralise the risk of inflation exceeding above the 2% BOE’s target. In addition to that, the UK Brexit Minister said changes would be required in the protocol that deals with Northern Ireland, as talks between Britain and the European Union (EU) continue this week. The EU already said it won’t renegotiate the agreement, raising the tension between the two countries.
Meanwhile, the British Retail Consortium (BRC) Retail Sales fell 0.6% in September on yearly basis. The fuel shortage held responsible for the weaker performance.
As for now, traders keep their focus on the UK’s Claimant Count Change, ILO Unemployment Rate, US JOLTS Job Opening data to gauge market sentiment.
