Sterling fell in European trade on Wednesday against a basket of major rivals, sharpening losses for the second session in a row against US dollar and plumbing a three-month trough after data showed UK economy shrank unexpectedly. 

The US dollar rose ahead of important US inflation data this week, which will give us clues on the likely path ahead for interest rates. 

GBP/USD fell 0.4% to 1.2441, the lowest since June 23, with a session-high at 1.2502, after losing 0.1% on Tuesday, resuming losses as the greenback rebounded. 

Grim Data

Recent UK data showed the GDP shrank by 0.5% in July, worse than expectations of a 0.2% recession rate. 

Such data showcases the US economy is falling faster and deeper into remission, in turn casting doubt about potential upcoming interest rate hikes by Bank of England this year.

And indeed, Bank of England Governor Andrew Bailey recently said the BOE is very close to ending the current cycle of policy tightening and interest rate hikes.

The Dollar

The dollar index rose 0.2% on track for the second profit in a row against a basket of major rivals. 

Later today, US consumer prices data will be released, crucial for gauging the likelihood for another US interest rate hike in November, which currently stands at 41%. 

Dollar rose against most major rivals on Tuesday ahead of important US inflation data.

Now investors await important US inflation data later this week to get clues about the likely path ahead for monetary policies. 

According to a Reuters survey, US inflation was up 0.6% m/m in August, compared to 0.2% in July. 

Later this month, the Federal Reserve is holding its periodic policy meeting, expected to hold interest rates unchanged.

Now Apple lovers look forward to the company's annual conference, at which it'll reveal the new iPhone 15 in addition to new versions of its other projects such as its watch and the iPad.

On trading, the dollar index rose 0.1% as of 21:25 GMT to 104.6, with a session-high at 104.9, and a low at 104.4. 

Sterling 

GBP/USD fell 0.1% as of 21:40 GMT to 1.2496. 

Recent data showed UK jobless claims rose 0.9 thousand in August, while analysts expected an addition of 17.1 thousand.

Aussie 

AUD/USD fell 0.1% as of 21:42 GMT to 0.6425. 

Loonie

Canadian dollar fell 0.1% against US counterpart to 0.7378. 

Most US stock indices fell on Tuesday as the tech sector faces considerable pressures, in addition to concerns about inflation.

Now investors await important US inflation data later this week to get clues about the likely path ahead for monetary policies. 

According to a Reuters survey, US inflation was up 0.6% m/m in August, compared to 0.2% in July. 

Later this month, the Federal Reserve is holding its periodic policy meeting, expected to hold interest rates unchanged.

Now Apple lovers look forward to the company's annual conference, at which it'll reveal the new iPhone 15 in addition to new versions of its other projects such as its watch and the iPad.

On trading, Dow Jones rose 0.1%, or 20 points to 34,683 as of 16:37 GMT, while S&P 500 shed 0.3%, or 15 points to 4,472, as NASDAQ slid 0.6%, or 86 points to 13,831. 

Palladium prices rose on Tuesday even as the dollar gained ground against most major rivals and ahead of crucial US inflation data.

Now investors await important US inflation data later this week to get clues about the likely path ahead for monetary policies. 

According to a Reuters survey, US inflation was up 0.6% m/m in August, compared to 0.2% in July. 

Later this month, the Federal Reserve is holding its periodic policy meeting, expected to hold interest rates unchanged.

Otherwise, the dollar index rose 0.2% as of 16:17 GMT to 104.8, with a session-high at 104.9, and a low at 104.4.

As the dollar strengthens, prices of dollar-denominated metals futures suffer as they become costlier to holders of other currencies. 

Palladium futures due in December rose 1.7% as of 16:18 GMT to $1240 an ounce.