Pound Rebounds on Strong UK Data but Faces US Inflation Test

The British pound rebounded against the US dollar following stronger-than-expected UK GDP and output figures for July. The Office for National Statistics reported that monthly GDP rose 0.4%, while manufacturing output increased 0.9%. Services also showed resilience, rising 0.4% month-over-month.

Despite this uptick in economic activity, the Bank of England is unlikely to raise interest rates soon due to continued weakness in employment and construction. However, markets are pricing a more hawkish policy path further out as energy-driven inflation risks build.

The pound's rebound faces resistance after Thursday's sharp selloff, and its next move may be influenced by the upcoming US inflation data release. If the figures show higher-than-expected price growth, it could strengthen the case for a Bank of England rate hike in September or later this year.