Sterling Steadies Amid Mixed Signals on US-Iran Talks

Currency markets remain cautious as investors assess mixed signals on possible U.S.-Iran talks and the risk of further official moves in Japan's yen market. Sterling holds steady at $1.344 against the dollar, supported by Fed policy decisions and dollar weakness. The pound remains flat versus the euro at 85.62 pence.

Brent crude rebounds 3% to $86.10 a barrel on Tuesday after Iran denies talks with the U.S., easing some inflation concerns for energy-importing economies such as Britain. Traders are bracing for possible further intervention in the yen, which could influence market expectations for future Fed rate hikes.

Attention is turning to Friday's monthly U.S. jobs report for July, which may shift market expectations for Federal Reserve rate increases. Francesco Pesole, a currency strategist at ING, notes that further U.S. dollar losses would require softer data that justifies a fresh dovish repricing.