Sterling stable as major data approaches

The pound sterling held steady on Tuesday, just shy of a one-year high against the dollar reached the previous day, as traders awaited key political and economic data later in the week.

British inflation data for June, due on Wednesday, will shape expectations on whether the Bank of England (BoE) will cut rates at its August meeting or delay until later in the year.

Additionally, King Charles III will announce the new government’s legislative agenda on Wednesday, followed by important job data on Thursday.

Colin Asher, senior economist at Mizuho, noted, “The UK is the market that is the most interesting this week, by some margin.”

Sterling was last steady against the dollar at $1.2969, just below Monday’s one-year high of $1.2995. It was also stable against the euro at 84.04 pence, after dropping to a nearly two-year low of 83.91 pence on Monday.

Upbeat British economic data and hawkish policymakers have supported the pound. Meanwhile signs of slowing inflation in the US have weakened the dollar, and political uncertainty in France has pressured the euro. The BoE’s June meeting saw a 7-2 vote to keep rates on hold, with policy minutes indicating a “finely balanced” decision among rate setters.