GBP Edges Higher as Dollar Softens Ahead of Inflation Release

The US Dollar has softened ahead of this week's inflation releases, causing the British Pound to edge higher in Asian trading on Monday. The GBP/USD pair rose to around 1.3520 after small losses, as traders await the Consumer Price Index (CPI) reading.

A Goldman Sachs note suggests that a benign CPI outcome would likely keep the Federal Reserve (Fed) on hold, despite last week's strong jobs report showing Nonfarm Payrolls rose by 162,000 in August. The Unemployment Rate remained at 4.1%, while rate pricing firmed up with the CME FedWatch tool putting the odds of a 25-basis-point September hike at nearly 58.3%.

In contrast, the Bank of England (BoE) is fully pricing in a rate rise by year-end and another by March 2027, reflecting concerns over fiscal sustainability and sticky inflation. The BoE targets price stability around 2% inflation, using interest rates as its main lever.