British Pound Gains as BoE Member Warns of Embedded Inflation

The British Pound (GBP) climbed 0.40% against the US Dollar (USD) on Tuesday, as the Greenback retreated from multi-month highs. The move was supported by hawkish remarks from Bank of England (BoE) Monetary Policy Committee member Catherine Mann, who warned that inflation in the UK has become increasingly embedded. Her comments boosted expectations for a BoE rate hike in November, with markets pricing an 87% chance of such a move.

The Pound's strength came as the US Dollar Index (DXY) fell 0.31% to 101.78, driven by an improvement in risk appetite and a widening US trade deficit in August. The deficit expanded to $-105.6 billion, missing forecasts of $-102 billion, and included record goods trade deficits with several countries, including Mexico.

In other markets, energy prices dipped slightly, with West Texas Intermediate (WTI) crude oil falling 0.59% to $88.75 per barrel, as hostilities in the Middle East continued. Meanwhile, the UK's economic calendar was light, with traders focusing on upcoming remarks from BoE Governor Andrew Bailey, scheduled for Thursday.

Technically, GBP/USD remains bearish in the near term, trading below key resistance levels around 1.3451. Immediate support is seen at 1.3159, with resistance near 1.3304 and 1.3428. The Relative Strength Index (RSI) suggests only modestly negative momentum.