The British pound traded flat on Tuesday, with GBP/USD at 1.3634, down 0.01%, as a stronger tone in U.S. government bond yields bolstered the dollar.
The euro also eased to 1.1663 against the dollar, a 0.01% decline, while the cross-rate EUR/GBP drifted toward the 0.8550–0.8560 range. ING’s short-term fair-value estimate for EUR/USD remains just below 1.160.
Francesco Pesole, FX strategist at ING, noted that developed-market currencies began the week in a subdued tone despite heavy headline risks. The dollar’s strength reflected gains in longer-dated U.S. Treasuries, which offset broader pressure on the greenback. Pesole added that the Canadian dollar came under particular pressure as U.S.-Canada trade tensions intensified, with Washington threatening a 50% tariff on Canadian autos effective Jan. 1.
Market pricing suggests 32 basis points of tightening by the Bank of England by year-end, a view ING described as overly hawkish. The strategist said the balance of risks for the dollar remains skewed to the downside but expects further consolidation into the Jackson Hole symposium later this week.
ING’s baseline view is for EUR/USD to stabilize rather than break above 1.170 in the near term. The bank also projects EUR/GBP rising toward 0.870 in coming months and AUD/USD reaching its 0.72 target for the third quarter, potentially extending beyond the May highs of 0.7260–0.7270 by year-end.
Upcoming catalysts include Tuesday’s U.S. consumer confidence report following softer prints in June and July, as well as housing data. Germany’s Ifo business climate survey is also due, following a summer of improving sentiment readings in Europe’s largest economy.
