Sterling holds gains on Tuesday

The pound sterling held steady against the dollar on Tuesday, maintaining Monday’s gains at $1.3224, a 0.7 per cent rise from the previous day.

The currency has gained 3.85 per cent against the dollar this year, marking a potential second consecutive year of gains.

Traders are anticipating key UK inflation data and a Bank of England (BoE) meeting this week, alongside a potential start to a US easing cycle.

Analysts at Lloyds Bank suggested that any aggressive Federal Reserve easing could prompt the BoE to consider the impact of exchange rate strength on inflation.

While the BoE is expected to keep interest rates unchanged on Thursday, futures markets now imply a 38 per cent chance of a quarter-point cut, up from 20 per cent on Friday.

Inflation figures due Wednesday will be closely scrutinised after last week’s unexpected stagnation in Britain’s economy. The pound was flat against the euro at 84.235 pence.