GBP/USD clawed back to stand relatively steady on Wednesday, overcoming a brief fall to a low of 1.2434 that followed slightly above-forecast U.S. inflation data, but the pound remained vulnerable near trend lows and potentially in need of help from U.S. retail sales on Thursday.

Though trading back near 1.25 after the dollar bounce faded, sterling's precarious position stems partially from below-forecast UK GDP and assorted output data.

The weak UK data gives credence to recent less-hawkish musings by BoE members, which have reduced the expected UK rate path even as British inflation hovers just below 7%.

A sparse data UK calendar, GBP/USD traders will focus on U.S. data which includes Thursday's jobless claims and retail sales, as they await British inflation data on Aug.
20, the day before the BoE's MPC meeting.

Should UK growth price remain near current levels, recent dovish UK rate expectations will almost certainly reverse, providing a boost for GBP/USD.

However, a dramatic drop in UK inflation could provide cover for the BoE to address mounting UK growth concerns, lowering rate expectations and pushing GBP/USD to new trend lows by late May lows near 1.23.

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