LONDON: The pound struggled for direction on Tuesday after data showed Inflation in the USA slowed down slightly in November and that British wage growth it got cold in October.
Pound Sterling rose 0.07% to $1.2563, having traded around that level for most of the day. The euro rose 0.22% to 85.93 pence.
US consumer prices rose 3.1% in the year to the end of November, data showed on Tuesday, slightly below the 3.2% rate in October. In the monthly comparison, prices rose 0.1%.
Currencies fluctuated but generally ended up where they were before the release, with the data almost completely in line with analyst expectations.
The pound fell slightly in the morning session in Europe after data showed that British profits, excluding bonuses, were 7.3% higher than a year ago in the three months to October, down from 7.8% in September. Economists had expected a drop to 7.4%.
The Bank of England sets interest rates on Thursday and the data raises “the risk that some of the three hawks who voted in favor of a hike in November will now favor a hold,” said Chris Turner, global head of lender ING markets.
Economists and traders think the bank will almost certainly keep interest rates at 5.25%. But they will be watching for clues about when borrowing costs might start to fall.
The Federal Reserve is expected to set interest rates on Wednesday, before the European Central Bank on Thursday. Both institutions are also expected to keep rates stable.
Sterling hit a three-month high of $1.2733 to the dollar in late November as US bond yields fell sharply on hopes the Fed will begin cutting rates early next year . The euro fell to a three-month low against the pound on Monday at 85.5 pence.
Market players believe the BoE is likely to hold rates a little longer than the Fed and ECB, increasing the appeal of sterling.
However, Ashley Webb, British economist at Capital Economics, said Tuesday's wage data would likely raise bets that the BoE could cut rates “as early as the middle of next year.” He said the data “makes our prediction that rate cuts will begin in late 2024 look a little more challenging.”
The dollar index, which tracks the currency against six pairs, fell 0.14% to 103.92.



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