Pound Treads Water as Dollar Strength Continues on Fed Rate Hike Expectations

The British pound has stabilized above $1.34 against the US dollar due to expectations of further Federal Reserve rate hikes.

Market sentiment and domestic economic data are supporting sterling, but the dollar index remains elevated on bets that the Fed will tighten monetary policy.

According to the CME FedWatch tool, markets assign a high probability to a 25-basis-point rate hike at the next Federal Open Market Committee meeting, which is underpinning the dollar and putting pressure on sterling.