The Pound Sterling (GBP) remains broadly stable against the US Dollar (USD) on Tuesday after softer-than-expected US employment data, while traders prepare for several key economic releases later this week. At the time of writing, GBP/USD is trading around 1.3508, showing little movement on the day.
Market sentiment has also been influenced by fluctuations in energy prices. Oil prices eased after a Bloomberg report suggested that Pakistan believes the United States and Iran may be approaching an agreement, despite continued tough rhetoric from President Donald Trump. Following the headline, West Texas Intermediate (WTI) crude fell from an intraday peak near $84.69 to approximately $82.50.
Attention is now turning toward Wednesday’s US Consumer Price Index (CPI) report, which could significantly influence expectations for Federal Reserve policy. Markets anticipate annual headline inflation to ease to 3.4% in July from 3.5% previously. Core CPI, which excludes food and energy prices, is also expected to decline by one-tenth to 2.5% year-on-year.
The US economic calendar remains busy on Thursday, with the Producer Price Index (PPI) and initial jobless claims scheduled for release. These indicators will be closely watched following the weaker-than-anticipated July Nonfarm Payrolls report, which has increased uncertainty surrounding the US labor market and monetary policy outlook.
Meanwhile, UK-focused traders are awaiting the preliminary second-quarter GDP figures. The British economy is expected to have expanded 1.1% year-on-year, while quarterly growth is projected to slow from 0.6% to 0.4%.
With both economies facing important data releases, GBP/USD price action remains relatively subdued as investors await clearer signals. Meanwhile, expectations for a September Fed rate hike have continued to rise, with Prime Terminal data indicating a 52% probability of a 25-basis-point increase.
Trade Idea: Consider buying GBP/USD above 1.3500, targeting 1.3570, while placing a stop-loss below 1.3460 to limit downside risk.