GBP/USD remains stable near 1.3475 as market participants appear cautious before the release of the US CPI data

GBP/USD Extends Gains for Second Consecutive Day

The GBP/USD currency pair continues its upward momentum on Tuesday, marking its second day of gains. After rebounding from a three-week low near 1.3390, the pair is now trading close to 1.3475, reflecting a modest increase of about 0.10% for the session.

US Dollar Faces Pressure Amid Fed Independence Concerns

The US Dollar is struggling to find strong support as concerns mount over the independence of the Federal Reserve. This uncertainty has provided a boost to the GBP/USD pair. Notably, prosecutors have launched a criminal probe into Fed Chair Jerome Powell. Powell responded by emphasizing that any legal threats stem from the central bank’s commitment to setting interest rates based on what is best for the public, rather than aligning with presidential preferences.

Mixed US Economic Signals Limit Dollar Downside

Despite these developments, the US Dollar’s losses remain contained, as expectations for aggressive policy easing by the Federal Reserve have diminished. A recent drop in the US Unemployment Rate has largely offset weaker-than-expected Nonfarm Payrolls data, supporting the view that monetary policy may remain steady in the near term. As a result, traders are cautious about making strong bearish bets on the Dollar, with attention now turning to the upcoming US consumer inflation report.

BoE Rate Cut Expectations and Upcoming Economic Data

Meanwhile, speculation that the Bank of England (BoE) could implement two additional rate cuts in 2026 may weigh on the British Pound and limit further advances for the GBP/USD pair. This week, investors are also awaiting the release of the US Producer Price Index on Wednesday, as well as the UK’s monthly GDP figures on Thursday, both of which are expected to influence the currency pair’s direction.