Sterling Struggles Amid Dollar Resurgence and Inflation Data

Sterling faced a retreat on Wednesday as the U.S. dollar strengthened against major currencies. The dollar's rise was fueled by wavering investor confidence in the U.S. Federal Reserve's independence, while UK traders analyzed fresh producer price inflation data.

The British pound decreased by 0.33% to $1.3434, following a decline in the euro, which fell 0.5% to $1.1584. Despite an initial slump due to President Donald Trump's decision to remove Fed Governor Lisa Cook, the dollar regained its composure, rising 0.3% against a basket of currencies.

Throughout the month, sterling remains poised for a 1.5% increase against the dollar, aided by tempered expectations for rate cuts by the Bank of England and positive economic indicators. Bank of England's Catherine Mann emphasized the significance of sustaining current monetary policy to counter persistent inflation, as UK producer output price inflation hit a two-year high of 1.9% in June.

(With inputs from agencies.)