GBP/USD Holds Steady as UK Inflation Rises and Fed Rate Decision Looms

The GBP/USD exchange rate has remained unchanged despite US dollar weakness ahead of today's Federal Reserve rate decision. This comes as UK inflation rose to 3.1% year on year in August, driven by higher petrol prices and airfares.

UK service sector inflation remained at 3.4%, while core inflation was also unchanged at 2.6%. The Bank of England is expected to leave interest rates unchanged this week due to a weak labour market containing price pressures.

The US dollar has been boosted by rising Treasury yields, but the Federal Reserve rate decision will be closely watched for any signs of further hikes. Analysts are 91% convinced that the Fed will hike rates by 25 basis points, but the impact on the dollar may be minimal given the move is already priced in.