Dollar Edges Higher on Sterling Slide as UK PM May's Future in Doubt
The dollar rose against its rivals Tuesday on higher-than-expected U.S. wholesale inflation and a slump in the pound amid growing uncertainty over UK Prime Minster Theresa May's future.
The U.S. dollar index, which measures the greenback against a trade-weighted basket of six major currencies, rose by 0.22% to 97.39.
The Labor Department said on Tuesday its core producer price index for final demand increased 0.3% last month, above economists' forecasts. In the 12 months through November, the core PPI rose 2.7%.
The uptick wholesale inflation did little to alter expectations for a December rate hike as 76% of traders continue expect the Fed to hike rates next week, unchanged from a day earlier, according to Investing.com's Fed Rate Monitor tool.
For the second-straight day, weakness in sterling continued to underpin the greenback amid reports several UK lawmakers have sent letters of no confidence in UK PM May, raising doubt about her future.
Questions about May's future arrived as she made little progress convincing lawmakers in Brussels to amend the terms of her Brexit deal, increasing the prospect of a another referendum, or an extension of Article 50, which was triggered in March last year, setting into motion Britain's departure from the European Union.
"As a result, we think the UK’s position in the EU after March 2019 might still be any one of a Brexit deal, no deal or no Brexit," BNP Paribas (PA:BNPP) said." "But an extension of Article 50 and a possible referendum now look more likely than before."
GBP/USD fell 0.29% to $1.2527, while EUR/USD fell 0.29% to $1.1323.
USD/CAD rose 0.11% to C$1.3424 as gains in the pair were limited by a rising oil prices, underpinning the loonie somewhat.
USD/JPY fell 0.06% to Y113.28.