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GBP/USD steadies near support as markets await US inflation data

GBP/USD is testing the August mid range around 1.3550 ahead of US CPI and PPI, which could shift Fed rate expectations for the September 16 decision.

Reported · Written up by our desk · Major Pairs

FXStreet reports that the pound is consolidating against the US dollar near session level support around 1.3550, after GBP/USD eased from the early August 1.3400 area to stall near 1.3675 on August 21 and has moved lower for two weeks.

The same outlook highlights a rate parity dynamic between the Federal Reserve and the Bank of England, with both central banks at 3.75%, while markets now price in more than 60% odds of a Fed quarter point hike on September 16.

On the policy and inflation setup, the report says the Bank of England held at its July 30 meeting after a 6–3 vote, with three members favoring a move to 4%, and it points to UK inflation pressured by an energy shock, with UK CPI expected at 2.6% YoY on Friday.

For near term drivers, FXStreet cites US core PPI expectations of 0.3% MoM and 3.3% YoY and core CPI of 0.2% MoM and 3.4% YoY, both above the prior month, and it links hotter data to a stronger dollar and softer data to Sterling gains, with the pair's key technical resistance seen near 1.3650.

Latest closeGBP/USD 1.355 ▲0.1%

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