British Pound consolidates around 1.3500 vs USD; looks to US CPI, UK GDP for fresh impetus

The British Pound remained relatively stable around the 1.3500 level compared to the US Dollar on Tuesday, fluctuating between modest gains and slight losses. Throughout the European trading day, the GBP/USD pair held near the psychological 1.3500 mark, with trading volumes exhibiting minimal change. Traders have taken a wait-and-see approach, anticipating significant economic data releases from both the US and the UK.

On Wednesday, the US Consumer Price Index (CPI) will be disclosed, followed by preliminary UK Q2 GDP figures on Thursday and the US Producer Price Index (PPI). The current situation is influenced by the escalating US-Iran standoff and the Fed's potential shift towards a more hawkish stance, driven by inflation concerns due to volatile oil prices.

These factors have bolstered the safe-haven status of the US Dollar (USD), limiting the GBP/USD pair's upward movement. Iran's decision to exclude negotiations with President Trump, citing his imminent departure from office in January 2029, further complicates the outlook. Additionally, the ongoing blockade of the Strait of Hormuz by Iran-backed Houthis has hampered shipping traffic, contributing to crude oil prices reaching a one-and-a-half-week high.

While traders anticipate a possibility of a single interest rate hike by the end of the year, the recent lack of follow-through buying after breaking above the 1.3500 mark warrants caution for further near-term appreciation of GBP/USD. The immediate support level for the pair is seen at the 100-period Simple Moving Average (SMA) at 1.3408, with a break causing a weakening of the bullish sentiment and potentially exposing deeper retracements.

Should the pair maintain strength above this level, it could continue to rally towards the July monthly high, ranging between 1.3555 and 1.3560. Analyst Haresh Menghani, with over a decade of experience in global financial market analysis, has provided these insights.