The British Pound climbed back toward the 1.3375 area on Tuesday as traders positioned ahead of US inflation data. The 200-day moving average, sitting just below 1.3400, continues to cap the currency's recovery, while rising bets on a Bank of England rate hike lend the Pound support.
The British Pound recovered toward 1.3375 against the US Dollar on Tuesday, trimming earlier losses as it tried to retest resistance at the key 200-day Simple Moving Average. That widely watched indicator lies a few pips below 1.3400 and has capped the Pound's recovery over the past two weeks.
Traders wait on US CPI
Markets stayed hesitant on Tuesday, with the US Dollar slightly lower as investors awaited the release of US Consumer Price Index figures, which are expected to show a slight moderation in prices. Even so, inflation is seen holding well above the Federal Reserve's 2% rate.
After the CPI print, Fed Chairman Kevin Warsh will face the first of two hearings before the US Congress scheduled this week.
Rate-hike bets support the Pound
The pair had drifted up to around 1.3355 in early European trading, as traders ramped up bets that the Bank of England will be forced to raise interest rates this year to keep inflation under control.
Renewed Middle East tensions have pushed oil prices higher again after they fell back to pre-conflict levels over the past month. BoE Chief Economist Huw Pill signaled that rates will likely rise this year to prevent inflation from becoming entrenched.
Source: FXStreet
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