GBP/USD Treads Water Ahead of Crucial Upcoming Events

The British Pound Sterling (GBP) is trading near 1.3500 against the US Dollar, with a calm market due to a lack of significant domestic releases. The Pound has added around two cents since the start of the month without any notable UK economic data. However, this tranquility may soon be disrupted by upcoming events.

The Bank of England's Monetary Policy Committee is set to meet on September 17, and the outcome of this meeting will have a significant impact on the GBP. Currently, there are three dissenting voices within the committee, advocating for a quarter-point interest rate hike. If one more member joins their ranks, the decision would be five to four in favor of a rate increase.

The case for a rate hike is based on energy prices rather than domestic demand. The UK's Consumer Price Index (CPI) has been relatively stable, while crude oil prices remain high due to ongoing global tensions. On the other hand, the economic data suggests that growth is slowing down, which could make it harder for the committee to justify a rate increase.

The upcoming American inflation print on Wednesday will be closely watched, as it can reset the interest rate differential between the two countries. A softer-than-expected reading could revive the possibility of a September interest rate hike and take the GBP lower.