The GBP/USD pair is seen consolidating near the lower end of its weekly range, below the 1.3600 mark, during the Asian session on Thursday.
The downside, however, remains cushioned as traders look for more cues about the US Federal Reserve’s (Fed) interest rate path before placing fresh directional bets
Data released on Wednesday showed that the US Personal Consumption Expenditures (PCE) Price Index rose 3.7% over the 12 months through July, unchanged from the previous month and slightly above consensus estimates. This pointed to still-sticky US inflation and backs the case for at least one Fed rate hike by the end of this year. The outlook, in turn, helps the US Dollar (USD) preserve the overnight gains and acts as a headwind for the GBP/USD pair.
However, the US Treasury’s buyback strategy keeps US bond yields depressed, which, along with the optimism over a potential US-Iran deal and the reopening of the Strait of Hormuz, caps the safe-haven buck. In fact, media reports suggest that the US and Iran have reached a new ceasefire deal that would be announced in the coming days. Furthermore, Iran and Oman have agreed on a temporary maritime route for commercial ships travelling through the waterway.