FX round-up: Sterling begins week mixed ahead of BoE rates, inflation news
Sterling has got away to a somewhat mixed start to the week with investors already looking ahead to Bank of England's interest-rate decision and UK inflation data on Thursday.
For Monday, however, it negotiated a path lower against an in-form US dollar, but made gains on the euro as investors who bought that currency on the rumour now sold on centrist Emmanuel Macron winning France's presidential election.
At 16:46 BST, sterling was down 0.36% to $1.2935, but up 0.31% to €1.1839. The dollar-spot index gained 0.47% to $99.112.
"The pound is trading in a very narrow range against the dollar at the beginning of the week as the spotlight shines on the French election result," said FXTM's Jameel Ahmad.
"It looks like the British pound is shying away from touching 1.30 for the first time since September 2016," said vice president of market research Ahmad.
Investors were already shifting their attentions to the BoE on Thursday, and the likelihood of inflation risks being highlighted when the latest inflation report was delivered.
Chris Saint, senior analyst at HL Currency Service, noted that no changes in monetary policy were expected.
He said BoE's updated economic projections in its inflation report would be scrutinised to gauge its views on how the UK economy was fairing ahead of forthcoming Brexit negotiations.
Sterling was up on the aussie, loonie and rand, but fell on the kiwi and yen.
Neil Wilson, senior market analyst at ETX Capital, said sterling was at a crossroads this week.
"The pound has steadily strengthened since mid-January and enjoyed a further leg higher following (PM) Theresa May's decision to call a snap election," he noted.
"Now faces a stern test from a central bank that might follow up March's hawkish surprise with a more dovish tilt."
He added that the cable was now trading firmly above its 200-day moving average and seemed to preparing itself for an ascent on the $1.30 peak.
"Should it scale this level there are some short-term momentum indicators that suggest it could go higher. Many banks are starting to forecast renewed sterling strength, arguing that worst of Brexit has already been priced in."
Meanwhile, the US dollar had a robust run, gaining on the euro, aussie, loonie, kiwi, rand and yen.
"The US dollar has had a fairly decent start to the week, after last Fridays payrolls report, rebounding from five-month lows against a basket of currencies," said Michael Hewson, chief market analyst at CMC Markets UK.