GBP/USD Pressured as Fed Hawkishness Lifts Dollar Broadly

Sterling faces renewed headwinds as the Federal Reserve's policy path stays firmly hawkish, with U.S. CPI holding at 3.7% keeping rate-cut expectations subdued. FedWatch probabilities continue to favor a patient Fed, a dynamic that has already reshaped cross-asset flows and is now weighing on GBP/USD sentiment.

A firmer dollar environment typically squeezes cable from the top down, as capital rotates toward higher-yielding U.S. assets. Until there's a clear catalyst from the UK side—whether inflation data or BoE commentary—GBP/USD risks remaining range-bound under dollar strength.

Traders watching correlated markets, including gold's reaction to the same hawkish Fed narrative, should note that broad USD demand is the dominant theme shaping GBP/USD direction this week.