Inesting.com — Sterling traded little changed against the dollar on Tuesday while the euro slipped, as a firmer tone in the U.S. Treasuries helped the greenback claw back some ground ahead of this week’s Jackson Hole risk event.
stood at 1.3634, down 0.01% on the day. traded at 1.1663, down 0.01% as of 07:00 ET (11:00 GMT).
“Developed currencies have started the week on a quiet note despite the abundance of headlines,” said Francesco Pesole, FX strategist at ING.
“The dollar continues to take cues from the US bond market, with a good session for the back-end allowing the greenback to find some support.” Pesole added that trade tensions were an increasing driver of currency moves, “especially as US-Canada trade tensions keep escalating,” with Washington’s 50% tariff threat on Canadian autos from Jan. 1 seen as part of an escalating, not yet resolved, dispute.
On the data front, ING flagged Tuesday’s U.S. consumer confidence release as the next catalyst after soft prints in June and July, alongside housing figures.
“The balance of risks for the dollar remains skewed to the downside, but our baseline is for further consolidation into the Jackson Hole risk event later this week,” Pesole said.
No specific Fed speaker remarks were cited in today’s note; markets are instead focused on the Jackson Hole symposium for fresh policy signals.
Sterling’s move was not driven by domestic UK fundamentals, the pound largely tracked broader dollar dynamics rather than any British data or policy news. ING noted has “gradually eased back to the pre-UST buybacks 0.8550-60 area, a signal the positive premium on the euro has been scaled back,” and said a quiet UK data calendar over the coming weeks points to a low-volatility environment for the pair.
The broker still expects no Bank of England hikes this year, arguing market pricing of 32 basis points of tightening by year-end “remains too hawkish.”
For the euro, ING said its models put short-term fair value for EUR/USD “just below 1.160,” implying a modest dollar risk premium tied to last week’s U.S. Treasury buyback announcement.
“That helps our view that EUR/USD is more likely to stabilise than take another leap higher – i.e. above 1.170 – at this stage,” Pesole said. Germany’s Ifo survey, due later Tuesday, is in focus after a summer of improving business sentiment readings.
ING’s forward targets are for EUR/GBP to move toward 0.870 in coming months, contingent on dovish repricing of UK front-end rates, and for to move toward its 0.72 end-third-quarter target and potentially above the May 0.7260-70 highs by year-end, requiring inflation and Reserve Bank of Australia rhetoric to align more closely.