The GBP/USD pair is trading marginally lower on Wednesday following the release of US inflation data, which has led to an appreciation in the US Dollar (USD) and a decline in the Pound Sterling (GBP).
US Inflation Data
The US Consumer Price Index (CPI) for August came in slightly below expectations, but the core CPI rose more than anticipated. While the data showed a general decline in inflation, persistent core inflation suggests that the Federal Reserve (Fed) may adopt a more measured approach to interest rate cuts.
Fed Rate Expectations
The probability of a larger-than-expected 50 basis points (bps) rate cut at the upcoming Fed meeting has decreased significantly following the inflation data. Markets are now more confident in a 25 bps cut.
UK Economic Data
The UK’s Gross Domestic Product (GDP) growth rate for July came in below expectations, with negative growth in industrial and manufacturing production. This data has weighed on the Pound Sterling.
Technical Analysis
The GBP/USD pair is trading marginally lower, but the overall trend remains bullish. A break above the 1.3150 level could signal a continuation of the uptrend, with the next target at 1.3250. However, a break below the 1.3000 level could indicate a potential downtrend.