Pound Holds Ground Near 1.3420 Amid Central Bank Jitters

The British pound stabilized against the US dollar on Tuesday, finding support around 1.3420 as traders assessed UK inflation figures and positioned for the Federal Reserve's upcoming policy decision.

A combination of factors is contributing to the pound's resilience, including a hawkish Bank of England stance and a temporary pause in the dollar's recent strength.

The US dollar index has pulled back from recent highs as investors lock in profits ahead of the Fed's meeting, with market participants largely pricing in a hold.

Technical analysis suggests that 1.3420 has emerged as a short-term floor for GBP/USD, with immediate resistance seen near 1.3480 and the 1.3500 psychological level.