Important events today:

06:00 UTC: GBP – GDP change.

12:30 UTC: USD – Consumer Price Index (CPI).

The GBP/USD pair regained positive momentum during the Asian session on Wednesday, rising towards a fresh daily high, approaching the round figure of 1.3100. However, spot prices remain below the overnight peak, which calls for some caution before positioning for any significant recovery from the three-week low around the 1.3050-1.3045 area reached the previous day.

The U.S. dollar (USD) has paused its three-day positive trend and retreated from the monthly high, amid prospects of the Federal Reserve (Fed) beginning a cycle of policy easing in September. This, in turn, is seen as a key factor providing some support to the GBP/USD pair. At the same time, the overall weak tone in equity markets may help limit dollar losses and cap the currency pair amidst expectations that the Bank of England (BoE) will announce another rate cut this year.

The UK Office for National Statistics (ONS) reported on Tuesday that the number of people claiming unemployment benefits increased by 23.7K in August, compared to the previous figure of 102.3K and well below the expected 95.5K. Moreover, the ILO unemployment rate for the three months to July was expected to decrease from 4.2% to 4.1%. Nevertheless, the slowdown in UK wage growth was seen as positive news for inflation and may give the central bank more confidence in further rate cuts.

Traders may also refrain from aggressive bullish bets on the British pound (GBP) ahead of UK data releases, including monthly GDP data and the latest U.S. consumer inflation figures. The key U.S. Consumer Price Index (CPI) report will play a crucial role in shaping market expectations regarding the Fed’s rate-cut path. This, in turn, will drive demand for the U.S. dollar in the near term and provide fresh momentum for the GBP/USD pair.

Recommendations: Trading primarily with buy orders at the 1.3080 price level. Consider buy orders at the 1.3100 price level.