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Markets

Dollar higher as sterling plumbs 4-1/2 month lows

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Investing.com -

Investing.com - The dollar pushed higher against the other major currencies on Tuesday, while the pound dropped to four-and-a-half month lows after soft U.K. inflation data dampened speculation over rate hikes.

GBP/USD fell 0.50% to 1.6644, the lowest level since April 8 after official data showed that the annual rate of inflation in the U.K. slowed to a two month low of 1.6% in July from 1.9% in June.

The slowdown in inflation prompted investors to push back expectations for a rate hike by the Bank of England, sending sterling lower across the board.

Elsewhere, EUR/USD slipped 0.09% to 1.3349, not far from the nine month low of 1.3332 struck on August 8.

The euro remained under pressure after poor economic growth data last week added to pressure on the European Central Bank to implement fresh measures to shore up the faltering recovery in the region.

The dollar edged higher against the yen, with USD/JPY easing up 0.09% to 102.66, while USD/CHF was steady at 0.9066.

Market sentiment was supported by hopes that talks between Russia and Ukraine would result in a breakthrough to ease geopolitical tensions in the region.

Investors were looking ahead to U.S. inflation data later in the day for further indications on the possible future path of monetary policy. Data on Monday showed that U.S. home builder sentiment rose unexpectedly in August, pointing to underlying strength in the housing market.

The New Zealand dollar was lower, with NZD/USD down 0.20% to 0.8458 after weak inflation reports on Tuesday indicated that the Reserve Bank is likely to keep rates on hold following recent rate hikes.

AUD/USD edged up 0.14% to 0.9337 and USD/CAD added 0.17% to trade at 1.0905.

The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.14% to 81.74.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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