GBP/USD Rebounds, But Bearish Fundamentals Remain

The British Pound has made a slight recovery, trading above its lowest level since June 29 at around 1.3200 against the US Dollar.

However, the fundamental backdrop remains bearish, with the US Federal Reserve's hawkish outlook and elevated US bond yields favoring USD bulls.

The Bank of England's cautious approach to monetary policy amid stagflation fears also suggests that the path of least resistance for the currency pair is down.

According to the CME Group's FedWatch Tool, traders are pricing in over a 65% chance of another US interest rate hike in October, further validating the positive outlook for the USD.