Sterling rallied on Monday off early European session lows just below 1.38, rising a slight 0.03% on the day to 1.3835 in early U.S. trade as the market took back much of the dollar's broad earlier gains.
Overall GBP/USD remained mired near the middle of its summer range of 1.40-1.36, continuing to track economic recovery expectations and COVID uncertainties.
With global inflation data, and by extension asset taper and rate normalization, remaining in a state of flux after 2020's pandemic lows, FX traders are looking to the Fed for leadership.
Tuesday's U.S. CPI data will likely trump UK employment data as GBP traders look to the Fed, at its Sept. 22 meeting, for leadership on asset taper and rate hikes. A firm CPI print could shift voting Fed members to bring forward taper, which may provide the impetus for GBP/USD to rally above late July highs by 1.39 and make a run at the June 17 high by 1.4009 as the BoE is likely to move in tandem with the U.S. central bank.
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