Pound Sterling Traded Sideways as External Factors Dominate

The Pound Sterling has been hovering around 1.3450 against the US Dollar on Tuesday, marking its second sub-40-pip day within a week. Despite this stability, the pair's performance is largely influenced by external factors rather than domestic economic indicators.

The British economy has shown encouraging signs in recent weeks, with a strong July flash services survey and a hawkish minority at the Bank of England voting for a rate hike. However, these developments have had little impact on the Pound's value against the Dollar.

Instead, the pair's movement is largely driven by global market sentiment, particularly the performance of high-beta commodity currencies such as the Australian and New Zealand Dollars. These currencies gained significant ground on Tuesday, lifted by an equity melt-up and the prospect of the Strait of Hormuz reopening.

The Dollar itself experienced mixed results, losing value against certain currencies while maintaining its strength in others. The Pound managed to extract a modest 0.17% from the Dollar on the day, but this was largely overshadowed by the significant gains made by other currencies.