GBP/USD Support Firm as UK Inflation Data and Fed Decision Loom

The GBP/USD currency pair is showing signs of stabilizing near support as traders prepare for a potentially volatile combination of UK inflation data and the Federal Reserve decision.

Rising expectations for a Bank of England (BoE) hike later this year could support sterling, particularly if UK CPI surprises higher or the Fed falls short of increasingly hawkish market expectations.

Expectations are for the BoE to hold its interest rate at 3.75% this week, although the odds of a hike have risen sharply from 15.6% a week ago to 43.2%, according to overnight index swaps (OIS).

The bigger question is whether the hike arrives in November or December, and today's inflation figures could go a long way towards answering that.