The British Pound strengthened this morning after the Bank of England said inflation may continue to accelerate above its 2 percent target, reducing the chances that the central bank will reignite asset purchases.

The U.S. Dollar rose against the EUR USD and GBP USD as worries about Portugal’s ability to finance itself increased and demand dropped for risky assets and commodities. The shift in risk sentiment is expected to continue as long as issues about peripheral countries in Europe persist. Traders are not waiting for confirmation, but instead are reacting to the news as a precaution.

The British Pound weakened against the U.S. Dollar on Monday. Oversold conditions may have been the biggest contributing factor to the weakness. Spillover selling pressure triggered by the sovereign debt issues in Ireland may have encouraged some traders to pare back profitable positions. Overall the Dollar was strong because of the shedding of risky assets.