Sterling Flat Amid Dollar Gains as Trade Tensions Escalate

The British pound traded flat against the US dollar on Tuesday, while the euro slipped, as firmer U.S. Treasuries helped the greenback regain some ground ahead of this week's Jackson Hole risk event.

According to Francesco Pesole, FX strategist at ING, developed currencies have started the week quietly despite an abundance of headlines.

The dollar continues to take cues from the US bond market, with a good session for the back-end allowing the greenback to find some support. Trade tensions are increasingly driving currency moves, particularly in the CAD, as US-Canada trade tensions escalate, with Washington's 50% tariff threat on Canadian autos from Jan. 1 seen as part of an ongoing dispute.

The pound largely tracked broader dollar dynamics rather than any British data or policy news. ING noted that sterling has 'gradually eased back to the pre-UST buybacks 0.8550-60 area, a signal the positive premium on the euro has been scaled back.'