Dollar drifts higher
Traders await UK CPI and Powell testimony

SINGAPORE, June 21 Reuters The dollar was firmer on Wednesday leading in to Federal Reserve Chair Jerome Powell39;s appearance at Congress where he is expected to strike a hawkish tone, while sterling lingered below recent peaks ahead of key inflation data.

British inflation data is due at 0600 GMT, Bank of Japan Governor Kazuo Ueda is due to speak at 0630 GMT and Powell is due to begin his testimony before Congress at 1400 GMT.

Sterling fell overnight but recovered about half its losses to trade steady at 1.2763 through the Asia session, not far below last week39;s 14month high of 1.2849.

Economists expect inflation to show signs of easing and the data is likely to be decisive for the Bank of England. It meets on Thursday with markets currently pricing about a 75 chance of a 25 basis point hike and a 25 chance of a 50 basis point hike.

Sterling may halt the current reversal if expectations are reshaped, with the pair potentially jumping back above 1.28 and retesting last week39;s resistance at 1.2847, said Daniela Hathorn, analyst at Capital.com.

The euro was held to 1.0914 in Asia trade, while the yen slipped slightly to 141.80 per dollar as Bank of Japan minutes and officials stuck to a dovish stance and as traders turned their focus to the Fed.

Despite having paused last week, the Fed officials … still surprisingly aggressively forecasted another 50 basis points in hikes by end 2023, said…