Pound Consolidates Ahead of Fed Rate Decision

The British Pound has been consolidating above $1.3500 against the US Dollar ahead of this week's key economic data releases from both the UK and the US.

This week, the US Federal Reserve is set to announce its monetary policy decision on Wednesday, with market expectations pointing towards a 25 basis point interest rate hike.

The recent escalation of tensions in the Middle East has strengthened the safe-haven status of the US Dollar, keeping a lid on the GBP/USD pair. However, support for the British Pound comes from last week's better-than-expected UK GDP report, which showed a 0.4% expansion in July.

Traders are now looking to Tuesday's UK jobs report and Wednesday's UK CPI release for short-term momentum. Nevertheless, expectations that the Bank of England will maintain interest rates at 3.75% are capping the upside potential for the GBP/USD pair.