Sterling Steadies: Pound's Rally Amid Euro and Dollar Standoff

Sterling maintained its position near a three-month peak against the euro and dollar, driven by a stable risk appetite in European stocks. The British pound has rebounded post-budget losses, supported by reduced UK fiscal and political uncertainties, and is awaiting upcoming US economic data for further direction.

Sterling held its ground near a three-month high against the euro and dollar on Wednesday, influenced by steadying risk appetite which led to minimal changes in European stocks following a record-breaking three-day rally.

Despite the pound's typical positive correlation with global equity markets, its performance can be swayed by UK-specific developments. Recently, analysts pointed out that sterling had recovered from pre-budget declines, thanks to diminished fiscal and political risks facing the UK. As of Wednesday, the pound remained steady at $1.3500 against the dollar.

The US dollar was mostly unchanged as investors awaited significant US economic data. Market strategist Matthew Ryan suggested the pound/dollar pair might hover around 1.35, contingent on upcoming economic indicators and potential Bank of England rate cut decisions. Meanwhile, European Central Bank rates are expected to remain stable through early 2027.

(With inputs from agencies.)