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British Pound Hovers Near Multi-Week High as Dollar Stalls Ahead of Fed Minutes
The British pound held near a multi-week high against the U.S. dollar on Tuesday, as a quiet economic calendar kept currency markets in a holding pattern ahead of key minutes from the U.S. Federal Reserve's latest policy meeting.
As of 06:30 ET, the GBP/USD pair traded at $1.3382, a slight dip of 0.04% for the session but still close to its strongest valuation since the middle of June, according to data cited by Investing.com. The euro also drifted lower against the dollar, with the EUR/USD pair easing 0.10% to $1.1430.
Dollar Awaits Fed Catalyst
Currency market volatility was contained as traders awaited Wednesday's release of the Federal Open Market Committee (FOMC) minutes for fresh signals on the central bank's monetary policy outlook. Recent comments from Fed Governor Christopher Waller, who stated that risks to the outlook "have flipped on the hawkish side," were seen as adding little new information for markets.
Analysts at ING noted that the current environment is not conducive to selling the dollar. "Markets probably require a convincing narrative to short the high-yielding dollar in such a favourable environment for carry," said Francesco Pesole, an FX strategist at the bank. ING's analysis suggests the U.S. Dollar Index (DXY) will likely remain closer to the 101.0 level unless the Fed minutes deliver an unexpectedly dovish surprise.
AdUK Housing Data Shows Modest Rebound
On the domestic front, new data provided a mixed picture of the UK economy. The Lloyds house price index indicated a modest recovery in the property market, with average prices rising 0.2% in June, snapping three consecutive months of softness.
On an annual basis, house price growth ticked up to 0.6% from 0.5% a month prior. While easing mortgage rates have offered some relief, affordability remains a significant hurdle for buyers, according to Amanda Bryden, head of mortgages at Lloyds.