GBP/USD Holds Near 1.35 Before CPI and UK GDP

For the dollar, the key issue is whether July consumer prices revive concern that inflation is still too sticky for the Fed to ease aggressively. U.S. CPI rose sharply over the long run and is forecast to edge up 0.89% in July after a 0.42% decline in June, a sequence that would keep the Fed cautious if price pressures broaden beyond a few soft categories. The Treasury market is already pricing a 10-year yield around 4.72%, a level that keeps U.S. rates attractive relative to sterling assets and limits how far cable can rally on its own.

Sterling, meanwhile, is waiting on UK GDP to show whether the economy is gaining enough traction to justify firmer expectations for Bank of England policy. Britain’s labour market has remained relatively tight, with unemployment at 4.1%, but that has not been enough to break the pound decisively higher against a dollar still supported by higher U.S. yields and persistent policy uncertainty. Adalytica’s pound trade signals show sentiment at neutral, even as awareness remains extremely elevated, a sign that positioning is active but not yet committed to a strong trend.

That leaves GBP/USD vulnerable to whichever data point surprises more. A hotter-than-expected U.S. inflation print would reinforce the dollar’s yield advantage and pressure the pair lower. A firmer-than-expected UK GDP reading could give sterling a short-term lift by reviving the case that the BoE can stay tighter for longer. But with both economies facing slowing growth risks, the more likely near-term outcome is continued range trade until one of the reports forces a reassessment.