GBP Edges Higher vs USD as Fed Rate Hike Expectations Diminish

The British Pound has edged higher against the US Dollar as investors scale back expectations for Federal Reserve rate hikes following a soft Producer Price Index report. The GBP/USD pair, however, struggles to capitalize on the uptick beyond 1.3500, warranting caution for bullish traders.

The lack of surprise from the Consumer Price Index report pointed to signs of cooling inflation, giving the US central bank more room to hold interest rates steady. This has undermined the US Dollar and offered some support to the GBP/USD pair.

However, uncertainties surrounding the Middle East crisis have helped limit the downside for the safe-haven Greenback. The US-Iran standoff over the Strait of Hormuz keeps the geopolitical risk premium in play, warranting caution for USD bears.