GBP Falls Against USD as Fed Rate Hike Odds Rise

The Pound Sterling (GBP) has been declining against the US Dollar (USD) as the Greenback stabilizes ahead of the Federal Reserve policy decision on Wednesday.

According to the CME FedWatch Tool, markets are pricing in nearly a 38% chance of a rate hike in July, an unusually high level of uncertainty so close to a meeting. Citadel Securities expects the Fed to deliver a rate increase to solidify Chairman Kevin Warsh's inflation-fighting credibility following his repeated promises to restore price stability.

The Pound Sterling has been under pressure despite Britain's strong data run, which saw retail sales rise 1% in June, consumer confidence climb to a six-month high in July, and preliminary business activity surveys put the private sector back into expansion ahead of forecasts. The currency pair is trading around 1.3290 during the Asian hours on Tuesday.