Cooler US inflation data reduces Fed rate hike bets, weakening the USD and lifting the British Pound ahead of key UK employment figures.
The GBP/USD pair climbed to near 1.3550 in early Asian trading on Tuesday, extending gains as the US Dollar softened. Traders scaled back expectations for a Federal Reserve rate hike following softer-than-expected US inflation data, reducing demand for the USD.
Prior to this move, the pair had traded in a tighter range, with the USD supported by hawkish Fed commentary. The shift in sentiment follows recent economic prints, including lower US consumer price index figures, which have fueled speculation of a pause in the Fed’s tightening cycle.
Market focus now turns to upcoming UK jobs data, which could influence the Bank of England’s policy outlook and further impact GBP volatility.