The sterling‑dollar pair edged higher on Monday, gaining 0.14% to settle at 1.3535 as of 05:10 ET (09:10 GMT). The move came as the U.S. dollar index remained subdued, with ING projecting the index to drift in a narrow 99.00‑99.50 band.
Across the euro area, the EUR/USD pair rose 0.07% to 1.1622, trading within a tight range of 1.1580‑1.1640 and showing a slight downside bias. ING also expects the EUR/GBP cross to stay confined between 0.8580 and 0.8610.
Market participants are pricing a 58% probability that the Federal Reserve will deliver a 25‑basis‑point rate cut at its September 16 meeting. The outlook follows expectations for the August U.S. consumer‑price index, where ING forecasts a month‑on‑month increase of 0.4% in headline CPI and 0.2% in core CPI.
In the Treasury market, the United States is set to auction $119 billion of three‑, ten‑ and thirty‑year bonds this week, alongside the launch of a buy‑back programme for longer‑dated securities. The scale of the auctions underscores the Treasury’s ongoing financing needs amid a still‑soft dollar.
Eurozone growth data are also on the calendar. Analysts anticipate a confirmation of 0.4% quarter‑on‑quarter growth for Q2, alongside a Sentix confidence reading and the European Central Bank’s policy meeting on Thursday.
ING’s global head of markets for the UK and Central and Eastern Europe, Chris Turner, noted that the dollar’s weakness appears at odds with high energy prices and a stronger‑than‑expected August non‑farm payrolls report. He highlighted that the inverse correlation between global equities and the dollar is currently the strongest driver, outweighing the traditional link to oil prices. Turner added that higher energy prices and an under‑priced Fed provide limited near‑term support for the greenback.
The session also featured remarks from the UK Chancellor, John Healey, who delivered a speech in Coventry. Healey described the British economy as “turning a corner,” citing six interest‑rate cuts since the 2024 election and a stock‑market rally to all‑time highs. He warned that interest payments on debt could become the second‑largest expenditure in Whitehall after health. Turner remarked that the chancellor’s speech offered few concrete pro‑growth measures.
Overall, the foreign‑exchange market remains shaped by divergent expectations for monetary policy in the United States and Europe, pending U.S. inflation data and the upcoming ECB meeting. Traders will watch the dollar index, Treasury auction outcomes and euro‑zone growth figures for clues on the direction of the pound and broader currency dynamics.
