The British Pound (GBP) has given up its early gains against the US Dollar (USD), settling back to around 1.3235 during Monday's European session. The GBP/USD pair retreated as the USD recovered from morning losses, turning positive amidst market caution ahead of the US Consumer Price Index (CPI) data release for September, scheduled for Wednesday.
As of the latest update, the US Dollar Index (DXY), which measures the USD's strength against six major currencies, is up 0.15% near 102.38. Analysts expect the US headline inflation to rise to 3.7% year-on-year, up from August's 3.4%. The core CPI, which excludes food and energy prices, is projected at 2.5% YoY, slightly higher than the previous 2.4%.
The GBP/USD pair saw minor gains earlier in the day, trading around 1.3240 during the European session. The USD softened slightly against the GBP as traders reassessed the US Federal Reserve's potential rate hike path. Tensions in the Middle East added to market uncertainty, with reports of an attack on a Saudi airport heightening concerns ahead of key US inflation data.
The Saudi-led coalition reported that an unidentified projectile hit a passenger terminal at King Khalid International Airport in Riyadh, with the Houthis claiming responsibility, citing it as a response to 'Saudi aggression.' This geopolitical development has contributed to the cautious market sentiment.