Sterling Falls Ahead of Fed Decision Amid Oil Price Volatility

The Pound sterling edged lower against the dollar on Monday ahead of key economic events in both the US and UK. The EUR/USD pair held gains, while the USD/GBP fell to $1.3316, down 0.06%, as markets took a risk-on tone from easing Middle East tensions and a slump in oil prices.

Francesco Pesole, FX strategist at ING, said last week's escalation in the Middle East had finally pushed EUR/USD lower from its recent range. However, he noted that oil prices have retreated to around $92 a barrel due to reports of negotiations between Iran and Oman over the Strait of Hormuz.

ING expects the dollar to strengthen further in the near term unless the pause in hostilities endures and negotiations gain traction. Markets are focused on Wednesday's Federal Reserve decision, where policymakers are widely expected to hold rates steady.