Sterling today: Pound steady as firm dollar caps gains

Sterling hovered near a slight 0.08% increase against the dollar at $1.3229 on Tuesday, while the euro edged up 0.06% to $1.1229. The dollar's sustained support, driven by global bond yields, curbed both currencies' gains. Analyst Francesco Pesole of ING, cited the euro's peculiar weakness and rising yields as the key factors. Strong equities likely tempered dollar gains, though the domestic economic outlook remains favorable.

However, U.S. ISM services fell slightly to 54.9 in September, still indicating expansion. ING expects the Fed to maintain rates, with upcoming speeches and data potentially affecting the market. The Bank of England's Catherine Mann, who backed hikes previously, was set to speak today. Market expectations for interest rate tightening stand at 21 basis points next month, 36 basis points by year-end, and 89 basis points by June.

For EUR/GBP, ING anticipates a potential drop to the mid-July lows near 0.846, though this could change if French fiscal turmoil subsides or BoE speakers hint at an imminent rate hike.