Dollar stabilizes and sterling faces pressure as focus shifts to US inflation

On Thursday, the dollar steadied, while the pound experienced losses in light trading activity during the holiday season. Market participants are anticipating the release of crucial year-end data—the U.S. inflation figures scheduled for Friday.

The pound faced significant losses against the dollar, marking its most substantial decline in two months on Wednesday. This was triggered by British inflation falling below expectations at 3.9 percent annually in October, reaching its lowest level in two years.

Sterling dipped by 0.7 percent to $1.2638, and expectations of a potential interest rate cut by the Bank of England by May contributed to the decline. Sterling hit a one-week low on Thursday at $1.2618 and recorded its lowest level against the euro in over three weeks at 86.78 pence.

Analysts anticipate a similar decline in U.S. personal consumption spending data, with the annual inflation rate expected to slow to 3.3 percent, the lowest level since 2021.

The yen rose approximately 0.2 percent, settling at 143.24 against the dollar after reaching 142.81 earlier in the session. The euro remained at $1.0941.

The Australian and New Zealand dollars, after reaching five-month highs on Wednesday, experienced slight declines. The Australian dollar recorded $0.6744, and the New Zealand dollar was at $0.6251.

The dollar index stabilized at 102.40, showing a 1 percent decline since the beginning of the year. The Chinese yuan fell to 7.1469 against the dollar.

Bitcoin briefly surpassed $44,000 on Wednesday before stabilizing at $43,717 on Thursday, slightly below the 20-month high of $44,729 reached the previous week.