Pound Faces Reversal as Inflation and Conflict Weigh on Sterling
The British pound is poised to snap its three-week winning streak as investors reassess their positioning ahead of next week's central bank meeting.
A softer inflation reading and deteriorating Middle East conflict have prompted a reevaluation, with sterling trading marginally higher at $1.3318 versus the dollar but set for losses of 1 percent for the week if current levels hold.
The currency has retreated after reaching its highest since May last week, and traders are pricing in at least one rate hike by the Bank of England, which typically supports a currency.
However, investors remain uncertain about new Prime Minister Andy Burnham's fiscal plans, with Finance Minister John Healey seen as a safe pair of hands but markets still waiting for clarity.