GBP/USD Trades Near Flat as Mixed Economic Data Tempts Fed Rate Hike Expectations

The British Pound (GBP) is trading near flat against the US Dollar (USD), hovering just below the 1.3500 level, as a mixed bag of economic data from the UK and US tempers expectations of Federal Reserve rate hikes.

The latest GDP figures showed the UK economy grew at a steady 0.6% pace in Q2, beating market expectations of a slowdown to 0.4%. However, factory output figures disappointed, with Industrial Production contracting 0.2% in June and Manufacturing production shrinking by 0.5%.

The US Dollar remains capped, despite recent macroeconomic data showing some moderation of inflationary pressures. July's Consumer Price Index (CPI) figures showed a slight easing of inflationary pressures, which has led investors to scale back Fed rate hike bets for September, with futures markets now pricing a 40% chance of a quarter-point rate hike next month.