Sterling Hovers Near Weekly Low, Below 1.3600, Dollar Bulls Await Warsh Speech

Sterling traded on a weak footing against the dollar during the Asian session on Thursday, with spot prices hovering around 1.35909, extending the consolidation pattern below the 1.3600 level. Market sentiment was cautious, with investors broadly awaiting Federal Reserve Chair Warsh's speech at the Jackson Hole global central bank symposium on Friday for clearer signals on the U.S. rate path.

**Firm Dollar Caps Sterling's Performance**

The dollar index rebounded modestly from recent lows, exerting direct pressure on sterling. Market reports indicated that inflation risks from oil price volatility underpinned expectations for at least one more Fed rate hike this year, discouraging traders from placing fresh bearish bets on the dollar. Sterling had previously attempted to break above the 1.3660 resistance level but failed, subsequently retreating toward the weekly low.

**Markets Opt for Caution Ahead of Key Risk Events**

The U.S. Personal Consumption Expenditures (PCE) price index released on Wednesday, along with Fed Chair Warsh's Jackson Hole speech on Friday, are viewed by markets as pivotal for determining the dollar's near-term direction. Reports noted this marks Warsh's first Jackson Hole address as Fed Chair, and with markets divided over a potential September rate hike, his policy signals will directly influence dollar movements. Additionally, developments in the Middle East are also seen as a key variable affecting the dollar's safe-haven demand.

**Sterling Lacks Independent Upside Momentum**

Weak domestic U.K. data failed to provide additional support for sterling. Sterling fell back after two consecutive days of gains, currently trading in the weekly low zone. Analysts noted that until the Fed's policy outlook becomes clearer, sterling against the dollar may continue to trade in a range, with the 1.3600 level serving as a short-term bull-bear dividing line.