Sterling bulls shrugged off Tuesday's slide and regained 1.32, and GBP/USD could surpass the 2024 high at 1.3269 set on Aug.
27 en route to further gains if the Fed cuts aggressively later on Wednesday as many in the market are betting.

With futures markets discounting a roughly 60% chance of the Fed delivering an unusually large 50bp move to kick off its easing cycle, the outcome could be a seminal event for sterling traders, potentially figuring into their perceptions of the BoE's rate cut calculus for its decision on Thursday.

Today's above forecast UK core CPI moved rate cut odds to the lower end of the recent 20%-to-40% range, providing a boost for GBP/USD, but should the Fed go big, markets may conclude that dovish forces on the BoE may opt to follow suit.

However, the broader outlook for GBP/USD remains relatively bright.

With the Fed expected to cut a total of 250bp by year-end 2025, and the BoE a total of 186bp, the pound's rate advantage is likely to provide it with support even amid a UK easing cycle.

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