Ella 
On Wednesday, GBP/USD attempted a significant rebound and extended its consolidation trend for the third day in a row. GBP/USD is trading below the 1.2400 mark in Asia, still within striking distance of the lowest levels since early June hit on Monday.
Traders appear to be inactive now ahead of key data/central bank event risks this week, starting with the release of the latest UK consumer inflation data later today. UK headline inflation is expected to accelerate to 7.1% in August from 6.8% previously, while core inflation, which strips out seasonal fluctuations in food and energy prices, will fall to 6.8% from 6.9% in July. Higher inflation would indicate that wage pressures are still transmitting to higher prices, which would therefore be positive for GBP and give a positive boost to GBP/USD.
However, the market’s immediate reaction may still be limited, with the market still paying attention to the Bank of England’s (BOE) monetary policy meeting on Thursday, and the chances of adopting more aggressive tightening policies are decreasing. Indeed, Bank of England Governor Andrew Bailey told lawmakers earlier this month that the Bank was now “closer” to ending its streak of rate hikes. Additionally, renewed recession fears, coupled with signs that the UK labor market is cooling, could put pressure on the Bank of England to pause its interest rate hike cycle as soon as possible, halting the upside for GBP/USD.
Meanwhile, investors on Wednesday will also focus on the high-profile Federal Reserve policy decision, which will be announced late in the U.S. session. The Federal Reserve is expected to keep interest rates on hold at the end of its two-day meeting, but markets are pricing in another 25 basis point rate hike by the end of the year. Therefore, the accompanying monetary policy statement and comments from Fed Chairman Jerome Powell at the post-meeting press conference will be closely watched for clues on the path of future rate hikes, which will influence the direction of the US dollar and provide support for GBP/USD. The dollar provides new momentum.
