Cooler US CPI data reduces Fed rate hike bets, lifting the pound ahead of key UK Q2 GDP figures due Thursday.
The GBP/USD pair climbed toward 1.3500 in early Asian trading, supported by a softer US Dollar after July’s inflation data undershot expectations. The US Consumer Price Index rose 3.4% year-over-year, matching forecasts but easing from June’s 3.5% print, while core CPI slowed to 2.5% from 2.6%. Monthly figures showed modest gains of 0.1% and 0.2% for headline and core inflation, respectively.
Traders now see a 40% chance of a September Fed rate hike, down from earlier expectations, as officials await August’s CPI and jobs reports. Meanwhile, the UK’s Q2 GDP release is projected to show 0.4% quarterly growth, following a 0.6% rise in Q1. A stronger-than-expected outcome could bolster the pound further.
Market focus remains on Thursday’s data, with US Producer Price Index figures also due later in the session.