GBP Bounces Back After US CPI Release Amid Rising Fed Hike Odds

The British Pound rebounded from an initial dip after the release of US consumer inflation data, which came in line with forecasts. The Consumer Price Index (CPI) rose 0.4% month-over-month and 3.4% year-over-year, with core CPI increasing 0.3% above estimates. The market's initial reaction was to favor the US Dollar, but it has since recovered.

The odds of a Federal Reserve rate hike next week jumped to 88%, according to Prime Terminal, from 60% previously. However, traders are fading the initial reaction, and the GBP/USD is trading back at 1.3524, after dipping to around 1.3470 on the CPI release.

The Pound Sterling also received a boost from stronger-than-expected UK GDP data, which showed the economy growing at its fastest pace in 18 months in July, by 1.6% year-over-year. This has helped the Pound steady ahead of the Bank of England's decision next week.