British Pound Strengthens Above 1.3400 as Soft US CPI Dulls Fed Hike Hopes

The British pound gained traction during the early Asian session on Wednesday, pushing GBP/USD above the 1.3400 level to trade near 1.3405. The move was supported by broad US dollar weakness after softer-than-expected US inflation data for June tempered market expectations for further Federal Reserve rate hikes.

The softer CPI reading reduced the likelihood of aggressive tightening by the Fed, weighing on the greenback and providing a boost to the pound. Traders are now adjusting their rate hike bets as the data suggests inflation may be cooling more rapidly than anticipated.

The GBP/USD pair remains sensitive to upcoming US economic data and any shifts in Fed rhetoric. Support is seen near 1.3360, while resistance holds around 1.3450.