Ella 
GBP/USD gained some follow-through positive traction for the second day in a row on Wednesday, building on a modest rebound overnight from the 1.3050-1.3045 area, or three-week lows. However, spot prices struggled to capitalize on the move above the 1.3100 mark and retraced a few points in the last hour following UK macro data.
The Office for National Statistics reported that the economy maintained steady growth for a second consecutive month in July, compared with expectations for a modest 0.2% increase. Additionally, UK industrial and manufacturing production unexpectedly shrank in the reporting month. Expectations for further interest rate cuts from the Bank of England (BOE) amid slowing wage growth in the UK have increased and weakened the pound (GBP).
On the other hand, the U.S. dollar (USD) has attracted some sellers and currently appears to have ended its three-day winning streak and is back near its monthly peak amid dovish expectations from the Federal Reserve. This in turn provides some support for GBP/USD, helping to limit the downside for GBP/USD. Traders also appeared reluctant to make aggressive bets ahead of U.S. consumer inflation data, opting to wait and see.
The crucial U.S. Consumer Price Index (CPI) report will influence market expectations for how much the Federal Reserve will cut interest rates at its upcoming policy meeting on September 17-18. This in turn will play a key role in driving USD demand in the near term and provide some meaningful momentum for GBP/USD. However, given the above fundamental backdrop, caution is warranted before positioning for further appreciation of the pair.
