Pound Edges Higher on Softening Dollar, but Geopolitical Risks Cap Gains
The British pound is trading modestly higher against a softer US dollar in early European trading on Monday, but gains remain limited due to ongoing geopolitical tensions.
The dollar's softening is attributed to lower Treasury yields and expectations of a potential Federal Reserve interest rate cut in September. However, the Fed has maintained a cautious stance, emphasizing data dependence and keeping the dollar rangebound.
Despite the dollar's softer tone, the pound's movement is being capped by geopolitical risks, particularly tensions in the Middle East and uncertainty over trade policies. Additionally, the Bank of England's monetary policy path remains uncertain, with traders pricing in a slower pace of rate cuts compared to earlier expectations.