British Pound holds steady above 1.3500 vs USD as traders eye US CPI ahead of UK GDP

GBP/USD struggles to gain any meaningful traction ahead of the key US-UK macro releases.
The US CPI is due later this Wednesday, followed by the UK GDP and US PPI on Thursday.
Geopolitical risks and Fed-hike bets underpin the USD, capping the upside for spot prices.

Haresh Menghani FXStreet

The GBP/USD pair extends its sideways consolidation around the 1.3500 psychological mark through the first half of the European session on Wednesday. Traders opt to wait on the sidelines ahead of important macro data from the US and the UK.

The crucial US Consumer Price Index (CPI) report is due later today, followed by the preliminary Q2 GDP figures from the UK and the US Producer Price Index (PPI) on Thursday. In the meantime, hawkish US Federal Reserve (Fed) expectations might continue to underpin the US Dollar (USD) and cap GBP/USD.

Strategists at Deutsche Bank highlight how finely poised Fed expectations remain ahead of the latest US inflation releases, noting that “futures this morning are pointing to a 51% chance of a September hike.” They add that the current balance of risks could shift quickly, as “if we do get an upside or downside surprise today, that could help shift the balance one way or the other,” underscoring how sensitive Dollar pricing is to incoming data at this stage of the policy cycle.

According to the CME Group's FedWatch Tool, traders are currently pricing in over a 75% chance that the US central bank will raise borrowing costs by the year-end amid inflation risks stemming from volatile oil prices. Furthermore, the US-Iran standoff over the Strait of Hormuz lends additional support to the safe-haven buck.

An advisor to Iran’s Supreme Leader Mojtaba Khamenei said on Tuesday that the Strait of Hormuz will not be opened until the US meets Tehran's demands. Moreover, Iran-backed Houthis in Yemen escalated attacks on vessels in the Red Sea and Bab el-Mandeb Strait, targeting Saudi ships, leading to increased war-risk premiums.

The aforementioned fundamental backdrop favors USD bulls and warrants caution before positioning for an extension of the GBP/USD pair's recent move up witnessed over the past two weeks or so. However, the recent breakout through the 1.3500 mark suggests that the path of least resistance for spot prices remains to the upside.

Economic Indicator

Gross Domestic Product (QoQ)

The Gross Domestic Product (GDP), released by the Office for National Statistics on a monthly and quarterly basis, is a measure of the total value of all goods and services produced in the UK during a given period. The GDP is considered as the main measure of UK economic activity. The QoQ reading compares economic activity in the reference quarter to the previous quarter. Generally, a rise in this indicator is bullish for the Pound Sterling (GBP), while a low reading is seen as bearish.

AUD/USD seems vulnerable near 0.6800, 10-month low amid bullish USD

AUD/USD languishes near a 10-month low during the Asian session on Friday, awaiting a break below 0.6800 before the next leg up amid a bullish US Dollar. Firming Fed rate-hike expectations, along with fading hopes for US-Iran diplomacy, help the USD hold gains at its highest level since April 2025. Moreover, the RBA’s dovish tilt undermines the Aussie and backs the case for further losses.

USD/JPY bulls turn cautious near 160.00 amid intervention risks

USD/JPY enters a bullish consolidation phase around its highest level since early September as bulls turn cautious amid intervention risk near 160.00. Meanwhile, the downside seems cushioned as the wide US-Japan interest rate gap keeps the Yen carry trade active. Furthermore, the possibility of a jumbo Fed rate hike and Middle East uncertainties hold the US Dollar near a 19-month top, supporting the currency pair.

Gold remains on the back foot below $3,900

Gold now alternates gains with losses below the $3,900 mark per troy ounce on Friday. The precious metal struggles to regain traction amid the firmer US Dollar, mixed US Treasury yields and expectations of further tightening by the Fed at its December meeting.

Bitcoin just posted five straight losing weeks, and the storm may not be over yet

Bitcoin is struggling to find support, slipping below $70,000 as multiple headwinds threaten to push the Crypto King lower. The much-anticipated “Uptober” rally failed to materialize, with persistent selling pressure and widespread liquidations instead reinforcing the “Rektober” narrative.

Week ahead – Fed Minutes, inflation data and Nvidia earnings to guide investors

Fed minutes may add to hawkish tone as bets of 50-bps hike grow. Nvidia to report earnings as bar to impress high after spy scandal. Trade and geopolitics to be focal point of Trump-Xi summit.

Gold hit its lowest level of 2026 near $3,850

Gold (XAU/USD) attempts to stabilize around $3,890 on Friday after falling to $3,852 on Thursday, its lowest level since October 2025. The precious metal has lost more than 4% this week, as investors increasingly anticipate further monetary tightening from the Federal Reserve (Fed). The latest decline reflects a sharp change in market expectations.