GBP/USD struggles for a firm intraday direction around 1.2715, eyes on US CPI

• GBP/USD lacks firm intraday direction, holds above 1.2715 ahead of US key data.
• The softer UK GDP data could refrain the Bank of England (BoE) from aggressively tightening policy.
• Market anticipates an 86.0% chance that the Federal Reserve will pause rate hikes at its September meeting.
• The Q2 UK GDP, US CPI will be in the spotlight this week.

The GBP/USD pair moves sideways above the 1.2700 area during the early Asian session on Thursday. Market participants prefer to wait on the sidelines and await key data from the US and UK. The US inflation figure could trigger volatility in the market later in the American trading hours.

The Bank of England (BoE) chief economist, Huw Pill, stated last week that interest rates were expected to remain high for a longer period. He added that the central bank will be more data-dependent, and policymakers will respond as the economy and the data evolve. It's worth noting that the Bank of England (BoE) raised interest rates by 25 basis points (bps) to a 15-year high of 5.25% from 5% in its August policy meeting.

Investors will focus on the Gross Domestic Product (GDP) report on Thursday for fresh impetus. The weaker than expected figure could refrain the Bank of England (BoE) from aggressively tightening policy. This, in turn, weighs on the Pound Sterling.

On the US Dollar front, the recent commentary from Federal Reserve (Fed) speakers indicated that the Fed stance has shifted from additional rate hikes to holding rates steady. The Philadelphia Fed president, Patrick Harker, stated that the central bank can leave interest rates where they are. Meanwhile, Atlanta Fed president Raphael Bostic states that no further rate hikes are necessary.

Furthermore, money market futures do not anticipate higher borrowing rates. According to the CME FedWatch tool, the market anticipates an 86.0% chance that the Federal Reserve will pause interest rate hikes at its meeting in September. However, the US inflation data will offer hints about further monetary policy from the Fed in the next meeting. The dovish stance from the central bank might cap the upside in the Greenback and act as a tailwind for the GBP/USD pair.

Moving on, the UK will release the preliminary Q2 Gross Domestic Product (GDP) on Friday. The annual growth rate is expected to remain at 0.2%. Also, the UK Industrial Production and Manufacturing production data will be due. On the US docket, the key events will be the US Consumer Price Index (CPI) and the Producer Price Index (PPI) for July. These data could provide hints for a clear direction in GBP/USD.