British Pound Firms as US CPI Countdown Tests USD Bulls

The British pound firmed against the US dollar as traders awaited the latest US CPI report, a key catalyst for near-term FX volatility. GBP/USD held around 1.2750, supported by a softer dollar and expectations that US inflation may ease to 2.9% headline and 3.4% core year over year. A downside surprise could weaken the dollar and push GBP/USD toward 1.2850, while a hotter reading may reinforce higher-for-longer Fed expectations and send the pair toward 1.2650. The article highlights cautious positioning ahead of the release, a slightly softer DXY, and a market-implied 52% chance of a Fed rate cut in September, down from 60% a week earlier.