GBP/USD is trading slightly higher around 1.3360 during Wednesday’s Asian session after four consecutive days of losses. The pair is supported by a weaker US Dollar (USD) as markets await the US Federal Reserve’s (Fed) interest rate announcement later in the North American session.
The Fed is widely expected to keep its benchmark rate unchanged in the 4.25%–4.50% range for July. According to the CME FedWatch Tool, traders are pricing in a 97% probability of no rate hike at this meeting.
All eyes will be on the FOMC press conference for any hints of a potential rate cut starting as early as September. Market participants are also watching key upcoming data releases, including the Q2 Personal Consumption Expenditures (PCE) inflation report and July’s Nonfarm Payrolls, for further signals about the strength of the US economy.
On the UK side, the British Pound (GBP) remains under pressure as softening labor market conditions and persistent inflation weigh on sentiment. This environment could push the Bank of England (BoE) into a careful balancing act when it meets next week.
Despite a lift in food sales, the broader UK economy continues to show weakness. Disappointing PMI readings have strengthened expectations of a 25-basis-point rate cut by the BoE in August, with another potential cut by year-end as policymakers shift focus toward supporting growth.
