GBP Holds Firm as US Inflation Matches Expectations

The British Pound is holding steady around 1.3500 against the US Dollar after the US inflation report matched market expectations, providing relief for the Federal Reserve.

The Fed's focus on tackling higher prices has been met with a US CPI deceleration from 3.6% to 3-5% on a yearly basis, and core inflation dipping to 2.5% YoY from 2.6%.

As a result, investors are now expecting the Fed to hold rates unchanged at the September meeting, with odds at 60%, while the odds of a 25-basis-point rise stand at nearly 40%.

However, geopolitics continue to play their role, with negotiations between the US and Iran showing signs of stalling, and Iranian military posturing in the Strait of Hormuz.