The British pound traded little changed against the dollar on Tuesday, with the GBP/USD pair holding at 1.3634, down 0.01% on the day. The dollar’s strength stemmed from firmer U.S. Treasury yields, which lent support to the greenback across major pairs.
EUR/USD edged 0.01% lower to 1.1663, while the euro-sterling cross eased back to the 0.8550–0.8560 range, retracing from recent highs. Francesco Pesole, FX strategist at ING, noted that developed-market currencies began the week in a subdued tone despite a heavy news calendar. "The dollar continues to take cues from the U.S. bond market," Pesole said, adding that a strong session for longer-dated Treasuries provided the greenback with support.
ING highlighted that market pricing implied 32 basis points of tightening by the Bank of England by year-end, describing this as "too hawkish." Pesole suggested that the balance of risks for the dollar remained skewed to the downside, though he expected further consolidation into the Jackson Hole symposium later in the week. He added that EUR/USD was more likely to stabilize than breach 1.170 in the near term.
The Canadian dollar faced additional pressure as U.S.-Canada trade tensions escalated, with Washington threatening a 50% tariff on Canadian autos effective January 1. Pesole noted that the looming tariff threat was particularly weighing on the loonie.
Market attention also turned to Tuesday’s U.S. consumer confidence data, following softer prints in June and July, alongside housing figures and Germany’s Ifo survey. The euro-sterling cross was seen targeting 0.870 in the coming months, while the Australian dollar was on track to reach its 0.72 end-Q3 target, with potential to surpass its May highs of 0.7260–0.7270 by year-end.
