Pound Holds Near Six-Month High, No UK Data to Test This Week

Sterling traded in a narrow range against the dollar on Tuesday, ending near 1.3650, up about 0.1% from the previous session, with a daily trading band of only about 33 pips—the low just above 1.3600 and the high just above 1.3650. With no major UK economic data due this week, the pound took a breather near six-month highs, and market participation remained relatively subdued.

**Consolidation at Highs, Lacking Directional Catalysts**

Sterling had been strengthening on the back of inflation and labor market data. Consumer inflation accelerated to 2.9% in July, up from 2.6% in June, in line with market expectations, providing fundamental support for the pound. However, with no key UK data due this week, the currency lacks fresh directional guidance and is more likely to oscillate within a high-level range in the near term. Market reports indicate investors are still assessing the implications of earlier data for the Bank of England's policy path.

**Technical Picture Remains Constructive**

From a chart perspective, sterling holding above the 1.3600 handle suggests underlying buying interest remains intact. Despite limited intraday movement, the currency has not shown any significant pullback and remains within its recent stronger range. Analysts note that in the absence of data-driven moves, sterling's short-term trajectory will depend more on the dollar's overall performance and shifts in market risk appetite.

**Focus Shifts to External Factors**

With a domestic data vacuum this week, sterling's moves may be driven more by US headlines and dollar index fluctuations. If the dollar extends its weakness, the pound could test further upside resistance; conversely, if the dollar stabilizes and rebounds, sterling may face profit-taking pressure at elevated levels. Investors should watch for indirect impacts from US economic data and Federal Reserve officials' remarks on the currency pair.