The British pound traded little changed at $1.3634 on Tuesday, while the U.S. dollar found support from rising Treasury yields ahead of this week’s Federal Reserve symposium in Jackson Hole.
The euro slipped 0.01% to $1.1663, leaving the single currency near its short-term fair value of $1.160 as estimated by ING’s FX models. The pound’s cross versus the euro eased into a 0.8550–0.86 range, with ING forecasting a gradual drift toward 0.870 in the coming months.
ING’s FX strategist Francesco Pesole noted a backdrop of consolidation in currency markets before the Jackson Hole event, where Fed officials are expected to discuss the outlook for monetary policy. Rising U.S. yields have lent support to the dollar, while traders await upcoming U.S. data including consumer confidence and housing sector reports.
ING also highlighted elevated trade tensions between the U.S. and Canada, where Washington has threatened a 50% tariff on Canadian automobiles effective January 1st. The dispute has added pressure on the Canadian dollar, which has remained sensitive to protectionist rhetoric.
In the UK, money markets are pricing 32 basis points of tightening by year-end, a view ING described as excessively hawkish given the brokerage’s expectation that the Bank of England will hold rates steady through 2026. The pound’s stability reflects limited expectations for near-term policy shifts from the BoE.
Across the Atlantic, Germany’s Ifo business sentiment survey remains in focus after a summer of improving readings, offering a further gauge of eurozone economic momentum.
ING also projected the Australian dollar could reach 0.72 by the end of the third quarter, with scope to challenge May’s highs between 0.7260 and 0.7270 by year-end, assuming supportive global risk appetite and commodity prices.
