Pound Edges Up as Dollar Remains Soft Ahead of US Inflation Data

The pound rose slightly against the dollar on Monday while the euro also gained modestly. This is attributed to the greenback staying soft ahead of key economic data releases and a US Labor Day holiday.

Chris Turner, Global Head of Markets at ING, pointed out that the dollar should be performing better due to high energy prices and an above-consensus August non-farm payrolls print. However, he noted that the inverse correlation between global equities and the dollar 'seems to be the strongest right now, far higher than the dollar’s link to oil prices.'

The market is focused on Friday's US CPI report, where ING expects month-on-month readings of 0.4% headline and 0.2% core. This could nudge the Federal Reserve towards a 25 basis-point cut at its September 16 meeting.