💷 Pound Sterling Outperforms US Dollar Amid Rising Fed Rate Cut Expectations

📈 The British Pound (GBP) climbs toward 1.3570 against the US Dollar (USD) during Wednesday’s European session, supported by increased bets on a Fed rate cut in September.

📉 The US Dollar Index (DXY) drops to 97.70, its lowest in two weeks, as traders react to softer-than-expected inflation data.

📊 According to CME FedWatch, the probability of a rate cut has surged to 94%, up from 86% earlier this week.

📰 Headline inflation rose 2.7% YoY, slightly below expectations, while core CPI accelerated to 3.1%, indicating limited tariff impact.

⚠️ Some analysts remain cautious, noting that upcoming employment and inflation reports could still influence the Fed’s decision.

🇬🇧 Investors await UK Q2 GDP data due Thursday. Forecasts suggest 0.1% growth, down from 0.7% in Q1. Annual growth is expected at 1%, below BoE’s 1.25% projection.

👷‍♂️ Labor market concerns deepen as vacancies drop by 44K and payrolled employees fall by 8K in July. Firms show reluctance to hire amid rising social security costs.

📣 Market focus today includes speeches from Fed Presidents Barkin, Bostic, and Goolsbee, offering fresh cues on US monetary policy.

📐 Technical Outlook: GBP/USD remains bullish above the 20-day EMA (1.3425). RSI nears 60, signaling potential upside.
🔻 Support: 1.3140 (Aug 1 low)
🔺 Resistance: 1.3790 (Jul 1 high)         
 🧭 Summary for Forex Traders
GBP rallies toward 1.3570 as Fed rate cut bets hit 94%. DXY drops to 97.70. UK GDP data and labor softness add pressure on BoE. Bullish bias holds above 20-day EMA.