Pound Slumps as Markets Await UK Inflation and Fed Rate Decision

The British Pound (GBP) has weakened against the US Dollar (USD), trading near 1.3470 as Asian markets open on Wednesday.

This decline is attributed to expectations of a US interest rate hike by the Federal Reserve (Fed), which would strengthen the USD.

Markets are increasingly convinced that the Fed will raise its benchmark interest rate by 25 basis points at its September policy meeting, in response to rising energy prices and inflation above expectations.

According to Juan Perez, senior director of trading at Monex USA, investors should remain alert for any surprises despite being prepared for a hike.

The UK's August Consumer Price Index (CPI) inflation report is due later on Wednesday, with a projected increase of 3.1% YoY from July's 2.9%.

This figure will influence the Bank of England's decision-making ahead of its interest rate announcement on Thursday, although strategists at Scotiabank expect the BoE to hold rates steady at 3.75% in September.