The pound gained ground against the dollar while slipping against the euro on Wednesday ahead of the U.S. Federal Reserve’s monetary policy decision due later in the day.
The pound rose 0.1% against the dollar to $1.2913 while falling 0.1% against the euro to 85.81 pence. This comes after the euro fell 0.7% against the British currency on Tuesday; its largest daily fall since February.
Gains by the euro were limited, however, by investors who refused to over-commit to the currency given that the European Central Bank (ECB) is set to deliver its monetary policy decision the following day. The ECB is widely expected to resume its interest rate hikes.
ING strategist Chris Turner warned that the limited rise of the euro appears to result from concerns ahead of the ECB’s decision and not necessarily a bullish outlook on the sterling’s prospects going forward.
“Given that we are mildly negative on the euro going into tomorrow’s ECB meeting and that UK rates might be dragged higher by U.S. rates later today, we would say euro/sterling could have a little more downside to the 85.20 area over the next couple of sessions,” Turner remarked.