The U.S. dollar edged higher in early European trading Monday, while sterling also gained after the U.K. government agreed to water down its plans for unfunded tax cuts. GBP/USD climbed 0.3% to 1.1188 after the British government decided to reverse the proposed scrapping of the highest rate of income tax, a plan that has been widely criticized in the governing Conservative Party as well as the country as a whole. New Finance Minister Kwasi Kwarteng announced his plan to substantially cut taxes, including the 45p highest rate of income tax, as part of a mini-budget on Sept. 23.
The U.S. dollar stabilized in early European trade Wednesday ahead of the release of the minutes from the last Federal Reserve meeting, while sterling edged higher after the latest jump in inflation. Markets are still wary of any more hawkish commentary in the minutes, due at 14:00 ET (18:00 GMT), with traders looking to see whether the Fed signals another interest rate hike of 75 basis points in September, matching the July increase. Elsewhere, NZD/USD fell 0.1% to 0.6339 after the Reserve Bank of New Zealand hiked rates by an expected 50 basis points and pointed to the need to bring forward the timing of future rate increases.