FX round-up: Sterling dips on dollar, gains elsewhere ahead of BoE rates, inflation data

Sterling was modestly firmer against a basket of other key currencies on Tuesday but lost a little ground on an in-form US dollar, with cautious investors already looking to the Bank of England's fixtures on Thursday.

"Domestic influences to push the pound significantly in either direction have been thin on the ground," said Chris Saint, senior analyst at HL Currency Service.

Ahead-of-expectations data on UK retail sales for April from British Retail Consortium failed to garner much response in sterling.

"This year's later timing of the Easter bank holidays suggests the 5.6% increase in like-for-like sales is overstating the true health of the UK consumer," said Saint.

The short-term absence of sterling drivers was likely change later in the week as investors anticipated the Bank of England's interest-rate decision and inflation report on Thursday.

At 17:01 BST, sterling was down 0.02% to $1.2938, but up 0.45% to €1.1898. The dollar-spot index was up 0.54% to $99.593.

"The bullish Macron-induced euphoria has seen precisely zero follow-through," said Jasper Lawler, senior market analyst at London Capital Group.

"Better than expected economic data from Germany had a limited impact on what seems to be an extended retrenchment of euro bulls."

He said sterling was suffering a similar fate to the euro in the face of a resurgent US dollar, albeit to a lesser extent.

"Relative strength in the pound versus the euro might just be that traders are delaying a bigger sell-off until after the Bank of England has released its quarterly inflation report on Thursday," added Lawler.

Sterling was down on the rand, but up on the kiwi, yen, loonie and aussie, the latter also suffering against the greenback.

Michael Hewson, chief market analyst at CMC Markets UK, said the aussie's downward trend came after that country's latest retail sales figures missed expectations. It was also sensitive to fluctions in metals prices.

"The data reinforces speculation the Reserve Bank of Australia will keep interest rates at the current record low of 1.5% throughout the course of this year," said Hewson.

The US dollar had fallen on the rand, but gained on the euro, aussie, loonie, kiwi and yen.

"The US dollar has continued to drift higher, rising to a two week high against a basket of currencies as the more benign trading environment prompts additional capital flow out of the haven currencies of the Japanese yen and Swiss franc," said Hewson.

He observed that the yen had moved back to the 114.00 level for the first time since mid-March.