Ella 
GBP/USD fell from more than two-year highs of 1.3266 during London trading on Wednesday as the greenback rebounded. Investors are eyeing U.S. core personal consumption expenditures (PCE) data for July due out on Friday, which could become the next big trigger for the pair.
The U.S. Dollar Index (DXY), which tracks the greenback’s value against six major currencies, found some buying interest as value buying kicked in after hitting a fresh year-to-date (YTD) low of 100.50.
Despite the U.S. dollar’s recent recovery, the near-term outlook for the U.S. dollar remains bleak as investors are convinced the Federal Reserve will lower interest rates at its September meeting. Traders are now debating whether the Fed will cut interest rates significantly or stick to a modest reduction in borrowing costs.
According to the CME FedWatch tool, 30-day federal funds futures pricing data shows a 34.5% chance of a 50 basis point (bps) rate cut in September, with the remainder favoring a 25 basis point cut.
As for core PCE inflation, economists expect the annual rate of growth, the Fed’s preferred inflation gauge, to increase to 2.7% from June’s 2.6%, with the monthly reading to be a steady 0.2%. Signs of continued inflation will curb market speculation about a sharp interest rate cut by the Federal Reserve, while a further decline in price pressures will boost the market.
