Pound Treads Water Ahead of Key U.S. Inflation Data

The British pound remains steady against the dollar as global markets anticipate U.S. inflation data. The dollar's strength, driven by strong employment figures and rising bond yields, keeps traders cautious. The pound, however, shows strength against the euro as the British economy outpaces Germany's forecast contraction.

The British pound held steady on Thursday, remaining close to its lowest level against the U.S. dollar in a month as traders waited for U.S. inflation data that could shift market dynamics. Sterling was at $1.3076, showing a slight increase from Wednesday's low of $1.3057, the lowest recorded since September 12.

Strong U.S. employment figures have propelled the dollar higher, influencing global markets by diminishing expectations of significant Federal Reserve rate cuts. This development has driven U.S. bond yields up, enhancing the dollar's appeal in comparison to other currencies.

A reflection of the stronger British economy against the eurozone, the pound has performed better against the euro. On Wednesday, the German economy ministry projected a 0.2% contraction in 2024, marking a second year of declining output. Consequently, the euro has depreciated by about 1% against the pound recently and continued to fall on Thursday, trading at 83.60 pence.

(With inputs from agencies.)