Sterling Steady as Markets Await BoE's Inflation Clues

Sterling remained stable against the dollar and euro as investors anticipated British inflation data, which could inform the Bank of England's monetary policy decisions. Concerns about interest rate cuts, fiscal policies, and rising gilt yields continue to influence the currency's value amidst a volatile economic landscape.

Sterling remained largely unchanged against the dollar and euro on Tuesday, as market participants awaited crucial inflation data from the UK, set to be released on Wednesday. This data is expected to shed light on the Bank of England's future policy actions.

Forex strategist Kit Juckes indicated the potential vulnerability of the pound, especially if the anticipated consumer price index aligns with expectations. Should core inflation remain at 3.5%, it might not avert further speculation of a December rate cut.

Analysts pointed to last Friday's surge in gilt yields and lack of a corresponding sterling dip, suggesting the pound's weakness might be more cyclical than fiscal. Meanwhile, British Finance Minister Rachel Reeves faces challenges in meeting fiscal targets amidst market skepticism.

(With inputs from agencies.)