The Pound Sterling drops to near 1.3230 against the US Dollar as the latter gains temporary ground.
Economists expect annual core PCE inflation to accelerate to 2.7%.
For fresh cues on the BoE interest rate path, investors await Catherine Mann’s speech at 12:15 GMT.
The Pound Sterling (GBP) declines from a more-than-two-year high of 1.3266 against the US Dollar (USD) in Wednesday’s London session. The GBP/USD pair drops as the US Dollar recovers some ground, with investors focusing on the United States (US) core Personal Consumption Expenditure Price Index (PCE) data for July, to be published on Friday, as it could be the next big trigger for the pair.
The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, discovers some buying interest as value-buying kicked in after posting a fresh year-to-date (YTD) low at 100.50.
Despite the recent recovery, the near-term outlook of the US Dollar is still downbeat as investors are certain about the Federal Reserve (Fed) reducing interest rates at its September meeting. Traders debate now over whether the Fed will deliver a sizeable interest rate cut or will stick to a small reduction in borrowing costs.
According to the CME FedWatch tool, 30-day Federal Funds Futures pricing data shows that the probability of a 50-basis points (bps) interest rate reduction in September is 34.5%, while the rest are favoring a cut by 25 bps.
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