The pound erased yesterday’s rally and was fading back below the $1.32 level, with traders focusing on today’s economic releases.
As traders took profits from Monday’s upswing, the pair declined and sterling was trading 0.3% weaker against the greenback, seen around $1.3210, retreating somewhat form the daily lows of $1.3175 seen earlier during the session.
The UK inflation indices saw inflation rising above forecast in June as the monthly CPI rose 0.2% in June while compared to June of 2015 the prices rose 0.5%.
Higher inflation would complicate the Bank of England’s decision on whether to cut interest rates in August. The BoE’s Martin Weale said on Monday that he not yet decided on whether to vote for rate cut and appears willing to delay action if economic data holds up.
During the US session, Bank of England (BoE) Deputy Governor Ben Broadbent is due to testify on blockchain technology before the Economic Affairs Committee in London.
More data will come throughout the week. On Wednesday the UK jobless rate is predicted to stay at 5.0%, while the jobless claims change is expected to tick higher. The focus will also be on average weekly earnings for May.
Thursday will see retail sales for June from the United Kingdom and a big slowdown month-on-month is expected here, which might undermine sterling further.
From the US dollar perspective, building permits and housing starts for June are due and both should improve month-on-month.