Pound Flat, Market Weighs Energy Inflation and BoE Outlook
GBP/USD saw limited movement and remained around 1.3362 in recent trading, indicating the market is still adopting a wait-and-see approach. Sterling held back as investors weighed two major factors: the direction of the US dollar amid geopolitical uncertainty and the impact of oil prices on inflation, which could influence the path of interest rates.
For the pound, the energy theme remains important. As an energy importer, the UK is relatively sensitive to persistently high oil prices, as this can push up headline inflation and depress purchasing power. This makes it difficult for sterling to strengthen aggressively, even though the dollar isn't always rallying.
On the other hand, the US dollar remains the main anchor. If the market returns to risk-off mode, the USD is usually sought after, and GBP/USD tends to fall. However, if sentiment improves and the dollar weakens, GBP/USD has the potential to hold its ground or rise slightly, as long as there are no new surprises on the energy or policy front. (CP)
Source: Newsmaker.id
