Pound Sterling Holds Near Multi-Week High as Dollar Trades Sideways Ahead of Fed Minutes

The British pound held steady near a multi-week peak against a subdued U.S. dollar on Tuesday, as a light economic calendar kept currency markets in a holding pattern ahead of a key release from the U.S. Federal Reserve.

As of 06:30 ET (10:30 GMT), the GBP/USD pair was down a marginal 0.04% at $1.3382, remaining close to its strongest point since the middle of June. The euro also saw little movement, with EUR/USD easing 0.10% to $1.1430.

Dollar Awaits Fed Catalyst

The dollar's tight trading range comes as investors await the minutes from the Federal Open Market Committee's (FOMC) latest meeting, scheduled for release on Wednesday. The document will be closely scrutinized for clues about the central bank's future interest rate policy.

According to Francesco Pesole, an FX strategist at ING, markets currently lack a "convincing narrative to short the high-yielding dollar." In a note, Pesole argued that unless the FOMC minutes present a significant dovish surprise, the Dollar Index is likely to remain closer to the 101.0 level. Recent remarks from Fed Governor Christopher Waller on Monday were seen by ING as adding little new information for markets.

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UK Housing Data Shows Modest Rebound

Domestically, the only notable data release came from the Lloyds house price index. The report offered a glimmer of positive news for the UK property market:

• Average house prices rose 0.2% in June, ending a three-month period of softness.
• Annual price growth edged up slightly to 0.6% from 0.5%.

"Mortgage rates have eased from their recent highs, offering some encouragement to those considering a move," said Amanda Bryden, head of mortgages at Lloyds. However, she noted that affordability remains a significant challenge for buyers.