GBP/USD remains under pressure around the 1.2920 mark

The GBP/USD pair remains under pressure around 1.2920 heading into the European session. The Pound Sterling extends its downside following the softer-than-expected inflation readings for June.

The UK headline Consumer Price Index (CPI) MoM rose 0.1% in June, below the 0.4% expected and the 0.9% increase in May. On an annual basis, headline CPI dipped to 7.9%, falling short of the 8.2% expected and the 8.7% growth seen in May. The core CPI, excluding volatile food and oil prices, decreased to 6.9% versus the market consensus of 7.1%. This softer inflation data could help the Bank of England (BoE) hike rates by 25 basis points (bps) rather than 50 bps in the next policy meeting on August 3.

Across the pond, the US Dollar Index (DXY), a measure of the Greenback against a basket of currencies used by US trade partners, has surged to the 100.20 area after reaching the round mark around 100.00 in the early Asian session. 

Talking about the US data, US Housing Starts fell 8% MoM in June, following a 15.7% gain (revised from +21.7%) in May and below the market consensus of a 7.2% gain. Meanwhile, Building permits declined 3.7% in June from 5.6% prior (revised). Market participants anticipate that the Federal Reserve (Fed) is nearing the end of its policy tightening cycle and may commit to a more dovish policy stance.

Moving on, investors will watch the US Unemployment Claims and the UK Retail Sales for fresh impetus. Next week, the focus will shift to the Flash Manufacturing Purchasing Managers Index (PMI) and Flash Services PMI from the US and UK. These figures would significantly impact the pair and help determine the next direction for the GBP/USD pair.