Sterling pound hit a four-month low against the euro and a three-week low against the US dollar yesterday, as investors expected Britain to face more challenges when leaving the European Union.
British Prime Minister Theresa May was able to win a hard-line vote on the amendment of a trade bill yesterday before the British parliament, after which the pound dropped nearly 1 percent, its biggest daily drop since May 1.
British inflation data came today to push the British pound to its lowest level against the US dollar for 10 months at 1.3009, as the CPI rose less than expected by 2.4% in June. Market expectations for a rate hike at the August meeting fell to 69% from nearly 80% at the beginning of the current week.
The US dollar rose yesterday after Federal Reserve Chairman Jerome Powell gave an upbeat assessment of the US economy during his testimony on monetary policy to the Senate Banking Committee. Following the comments, the dollar advanced to a 6-month high against the yen at 113.13.
Powell is also to testify before the Financial Services Committee of the parliament on the monetary policy report. The dollar index is currently stabilizing at 95.20, slightly below its highest level in a year. The index moving in a bullish wedge over the daily chart may support the decline if it stabilizes below 95 levels.
