The GBP/USD pair trades on a softer note near the 1.3500 mark during Tuesday’s early European session. The US Dollar (USD) gains modestly against the Pound Sterling (GBP) as traders scale back expectations of a Federal Reserve (Fed) rate cut at the September 16–17 policy meeting. Attention now shifts to the UK’s July Consumer Price Index (CPI) report, due Wednesday.
Last week’s data showed the US Producer Price Index (PPI) recording its largest increase in three years, driven by rising goods and services costs. The strong print reduced bets on aggressive rate cuts, lending support to the Greenback. Still, most economists in a Reuters poll expect the Fed to deliver a cut in September and another before year-end.
Markets also await fresh cues from the Fed’s annual Jackson Hole Symposium on Friday. However, lingering concerns about the central bank’s independence from political influence could weigh on the USD and provide some support for GBP/USD.
On the UK side, the upbeat second-quarter Gross Domestic Product (GDP) figures may complicate the Bank of England’s (BoE) rate-cutting path. The economy expanded 0.3% in the three months to June, slowing from 0.7% in Q1 but outperforming the consensus estimate of just 0.1%, potentially limiting downside pressure on Sterling.
