Key points:

• Pound sterling edges higher
• Traders eye UK inflation data
• Dollar muted ahead of Fed minutes

Sterling is riding resilient growth and a softer dollar into Wednesday’s UK CPI report.

💷 Sterling enjoys the rate gap

• The GBPUSD advanced toward $1.355 Monday, extending last week’s gain and approaching its strongest level since mid-July.
• Sterling is benefiting from relatively high UK interest rates and fading expectations for another Federal Reserve increase.
• The British economy expanded 0.4% in the second quarter, while June GDP rose a better-than-expected 0.3%.
• That resilience supports the pound because it gives the Bank of England more room to fight inflation without immediately pushing the economy through the nearest trapdoor.

🔥 UK inflation prepares an encore

• July CPI lands Wednesday and economists expect inflation to ease toward 2.5% from 2.6%. It’s an optimistic forecast given the ongoing chaos and surging prices in oil markets.
• The Bank of England already expects inflation to reach approximately 3.2% during the fourth quarter. Brent crude near $90 creates additional upside risk because Britain imports much of its energy.
• A hotter CPI print could strengthen September BOE-hike expectations and lift sterling, particularly if services inflation also accelerates. A softer number would challenge the hawkish case.

🗓️ Two central banks, one busy chart

• The dollar side is also helping the pound-dollar. Weak US employment, tame inflation and a 0.6% decline in retail sales pushed September Fed-hike odds toward 30%.
• Sterling currently enjoys the rate differential — the gap between expected UK and US borrowing costs — but that advantage can disappear quickly.
• Fed minutes arrive Wednesday, hours after UK inflation. They predate America’s latest data releases but could reveal how broadly officials supported tighter policy.
• UK retail sales follow Friday, testing whether resilient GDP survived higher household bills. Your cable position has acquired a full social calendar.
• Technically, $1.36 is the immediate resistance area, followed by roughly $1.37. Support sits around $1.35, then $1.33–$1.34. Hot UK inflation plus dovish Fed minutes could unlock the upside; the reverse combination would send sterling back to inspect those lower floors.

Source: Tradingview