• The Pound Sterling exhibits strength against the US Dollar on Fed rate-cut optimism.
• Investors remain divided over the Fed rate-cut size in September.
• UK wage growth declines further in three-months ending July.

The Pound Sterling (GBP) clings to gains above the psychological support of 1.3000 against the US Dollar (USD) in Wednesday’s London session. The GBP/USD pair posted on Tuesday fresh year-to-date highs near 1.3050 amid sheer weakness in the US Dollar.

The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, finds temporary support after sliding to near 101.30, the lowest level seen in more than seven months.

Market participants appear to be largely bearish on the Greenback amid firm speculation that the Federal Reserve (Fed) will start reducing interest rates in September. Investors seem to be convinced about the Fed pivoting to policy normalization next month, but are split over the size of its first interest rate cut after years of policy tightening.

For fresh cues over the interest rate path, investors await the Federal Open Market Committee (FOMC) minutes for the July meeting, which will be published at 18:00 GMT. In the monetary policy announcement, the Fed left its key borrowing rates unchanged in the range of 5.25%-5.50% but warned that the economic outlook is uncertain and that the Committee is vigilant to the risks to both sides of its dual mandate (inflation and employment).