FX round-up: Sterling resumes lower as US dollar stabilises

Sterling resumed its position as market whipping boy again on Monday as the mighty US stabilised and nil-yielding gold plunged lower.

At 17:07 BST, sterling was down 0.58% to $1.2949, and down 0.05% to €1.1392.

"The GBP/USD has cooled after last week’s rally when the currency pair its highest level since May," said David Madden, market analyst at CMC Markets UK.

The UK's manufacturing purchasing-managers' index (PMI) in June came in below expectations, while that for the Eurozone beat forecasts.

FXTM research analyst Lukman Otunuga added sterling could find itself supported in the short-term as speculation heightened over a potential UK interest rate increase.

However, he cautioned gains were likely to remain limited as investors slowly came to grips with the reality of Brexit.

"With the UK economic outlook uncertain and political risk weighing on sentiment, an interest rate increase which may put pressure on growth and business confidence could easily add to the UK’s woes," said Otunuga.

Sterling was down on the aussie, loonie and kiwi, but up on the rand and yen. Meanwhile, the dollar-spot index rose 0.57% to $96.170. The greenback was up on most other key currencies.

"The greenback clawed back some of its losses during Monday's trading session," said Otunuga.

This was due to profit taking, hawkish central banks outside the US and markets mulling Donald Trump's ability to move forward with his pro-growth policies.

"The dollar index could be in store for further punishment," he said.

"Much attention will be directed towards the FOMC meeting minutes on Wednesday, which will be scrutinized for further clues on rate hike timings later this year."

Otunuga warned that if the minutes struck a different tone from the FOMC meeting in June, then the dollar could turn volatile.

"Technically, the dollar index remains under pressure on the daily charts with bears eyeing the 96.50 dynamic resistance to attack once again."