Investing.com – The dollar hit a two-month low on Wednesday in early trading in Europe ahead of a crucial U.S. inflation report, while the pound hit fresh 15-month highs on expectations of further rate hikes in the UK.

As of 09:15 ET (09:15 GMT), the , which tracks the currency against a basket of six other major currencies, was down 0.3% at 101.140, extending losses since the start of the week after several Fed members indicated that the central bank was nearing the end of its tightening cycle.

US CPI will boost confidence in the dollar

A 25 basis point rate hike since meeting later this month is all but taken for granted, but the U.S. consumer inflation report, due out on Wednesday, could help determine the number of additional supers in the chamber.

The index is expected to rise 3.1% in June, following a 4% rise in May, which would mark the smallest annual increase since March 2021, up 0.3%. Everything indicates that the annual rate will drop from 5.3% to 5%, down for the third month in a row.

“Our economist expects an underlying reading of 0.3% m/m, which should continue to provide encouraging news on disinflation, without altering the Fed’s narrative or convincing markets to stop take a rate hike for granted. July,” ING (AS:) analysts said in a note.

Pound hits new highs in 15 months

The pair is targeting a 0.1% rise to the 1.2945 level, just below new 15-month highs recorded at 1.2970 at the start of the session, as traders expect more rises from interest rate from , exceeding that of all other major economies. .

UK rates have risen at the fastest rate on record, data showed on Tuesday, adding to pressure on the Bank of England to act, while its report, released early on Wednesday, indicated that the country’s banks were “strong enough” to weather the risk of a worsening mortgage rate crisis.

The pair is expected to rise 0.2% to the 1.1025 level, just below its two-month high, and weak data has not dampened expectations for further interest rate hikes.

Bank of Canada to hike rates again

The pair is down 0.1% at 1.3224 ahead of the Bank of Canada meeting, which is expected to lead to a second consecutive quarter-point interest rate hike.

In June, the central bank raised its overnight interest rate to 4.75%, after a five-month pause, saying monetary policy was not tight enough given inflationary pressures.

The pair is down 0.6% to the 139.58 level and is set to post a fifth day of gains, the longest winning streak in around seven months, as US Treasury yields retreat forcefully.

The pair is up 0.1% to the 0.6693 level, while the pair is up 0.1% at 0.6205, after it decided to keep rates unchanged as expected .