Pound Edges Higher Amid Dollar Rally Uncertainty

The pound has gained value against the dollar, while the euro has slipped. This comes as traders assess whether the recent rally in the US currency will persist ahead of a week of key data releases.

The dollar's momentum may be tempered by upcoming jobs and inflation figures from the United States. ING FX strategist Francesco Pesole noted that 'data could re-emerge as a primary driver for the dollar this week.'

Pesole also highlighted that the dollar has become 'a bit expensive' according to their short-term valuation models, suggesting that its rally may be unsustainable.

Markets currently price in 16 basis points of tightening at the October 28 Federal Reserve meeting, down from a peak of 19bp last week. However, Pesole warned that a strong jobs print could lift pricing above 20bp.