Sterling rose more than 0.50% against the US dollar on Monday, lifting GBP/USD back above 1.3400 as demand for the greenback softened after Donald Trump played down the risk of an escalation in the US-Iran conflict. Markets remained alert to disruptions in the Gulf, with a US Navy blockade still in place and the Islamic Revolutionary Guard Corps saying the Strait of Hormuz was closed to unauthorised transit. US equities opened higher, while the Dollar Index fell 0.36% to 101.91, supporting the move in cable.
Bank Of England Policy And UK Data In Focus
The Bank of England raised rates last week by a 7-2 vote, with two members favouring a larger increase, and upcoming UK GDP data is in focus for its implications for the policy path and energy-price transmission.
US Labour Market And Inflation Outlook
In the US, the unemployment rate edged down from 4.2% to 4.1%, prompting a more hawkish repricing, and CME FedWatch put the probability of a December rate rise at 82%, up from 76% on Friday. Attention now turns to Tuesday’s CPI, expected to rise from 3.7% to 3.9% year on year, while core CPI is seen accelerating from 2.6% to 2.8%.
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