GBP/USD Buoys on Soft Dollar Ahead of Fed Decision

The British Pound (GBP) has seen an uptick in value as the US Dollar softens ahead of the Federal Reserve's upcoming policy announcement. The GBP/USD pair is currently trading near 1.3300, with investors cautious about the Fed's decision to keep interest rates unchanged or hike them immediately.

Derivatives markets are pricing in a 30.5% probability of an immediate rate increase, while a 76.6% chance of higher rates by September is also expected. This suggests that borrowing costs will remain restrictive for an extended period.

The Bank of England's (BoE) policy decision later this week is also being closely watched, with markets expecting the benchmark rate to be maintained at 3.75%. The BoE's decision is supported by the latest inflation figures, which showed annual consumer price gains slowing to 2.6% in June, a 15-month low.