Softer US CPI figures for June reduce Fed rate hike bets, lifting the pound against the dollar in early trading.
The GBP/USD pair climbed to 1.3405 in early Asian trading Wednesday, extending gains above 1.3400. The move follows softer-than-expected US inflation data for June, which eased expectations for further Federal Reserve rate hikes.
US consumer price growth slowed more than forecast, reinforcing bets that the Fed may pause tightening. The dollar index retreated, providing support for risk-sensitive currencies like the pound. Market focus now shifts to upcoming UK economic releases for further direction.
Traders are pricing in a higher probability of a Fed hold in September, with implied rates reflecting diminished hawkish sentiment.