The British pound fell slightly against the US dollar (GBP/USD) in Asian trading on Wednesday, hovering around 1.3500, continuing its weak performance after trading sideways. A stronger dollar was the main factor limiting the pound's rebound, as the market awaited the latest US inflation data to determine the future direction of the Federal Reserve's monetary policy. The US inflation report is seen as a key catalyst for the market recently. Investors are looking for clues about the Federal Reserve's future interest rate path through the Consumer Price Index (CPI) data. If inflation continues to ease, the market may increase expectations for a future policy shift, thus weakening the dollar; however, if rising energy prices drive renewed inflationary pressures, the Fed may maintain a more cautious or even tighter policy stance. US inflation data will be a crucial determinant of the dollar's short-term trend . Currently, there is still a significant divergence in the market regarding the Fed's next policy move. The Fed kept interest rates unchanged at its July meeting, but due to recent oil price increases reigniting inflation concerns, the market remains focused on the possibility of further tightening. According to market interest rate tools, investors' expectations for a 25 basis point rate hike in September have declined, currently at approximately 48%, down from the previous level of approximately 52%. This indicates that while the market remains concerned about inflation risks, confidence in another Fed rate hike in the near term has weakened. Meanwhile, the dollar is supported by international risk factors. Recent developments in the US-Iran situation have affected market sentiment; investors are focused on the potential improvement in energy supply from diplomatic communications, but also worried about the continued uncertainty surrounding the negotiations. Pakistan's Defense Minister previously stated that the US and Iran were close to reaching an agreement on arrangements regarding the Strait of Hormuz, and that communication between Iran and Oman had also made some progress. This news initially improved market risk appetite and reduced some safe-haven demand. However, market optimism was subsequently affected by stronger signals. These statements increased investor uncertainty about the situation, leading to a renewed inflow of safe-haven funds into the US dollar. For the pound, current market focus is not only on dollar movements but also on the UK's domestic economic performance and the Bank of England's future policy direction. Strategists at the Royal Bank of Scotland stated that recent pound movements have been driven more by market sentiment, with a high correlation between the pound and risk reversal indicators, while the demand for downside protection for the pound in the options market is declining. The lower cost of downside protection for the pound reflects a slight easing of market concerns about short-term risks . However, as the dollar remains supported by inflation expectations and safe-haven demand, GBP/USD still faces short-term pressure. The market will focus on US CPI and PPI data, as well as speeches by Federal Reserve officials. If US inflation data is weaker than expected, the dollar may come under pressure, and the pound/dollar pair may retest recent highs; if inflation is strong, a stronger dollar may continue to suppress the pound's performance. The GBP/USD daily chart shows the exchange rate has been fluctuating around 1.35 recently, remaining in a correction phase after a mid-term uptrend. Currently, the price is under pressure from short-term moving averages, but the previously formed upward structure has not been broken. Resistance is seen in the 1.3550-1.3600 area; a break above this area could lead to a further challenge of the 1.3650 level. Support is first seen in the 1.3480 area, followed by the psychological level of 1.3400. A break below 1.3400 could open up further downside potential. Overall, daily market momentum is weak, but the trend still needs confirmation from the dollar's direction. The GBP/USD 4-hour chart shows the price consolidating around 1.3500, with short-term bullish and bearish forces temporarily balanced. The RSI indicator remains in neutral territory, indicating a lack of clear market direction; the MACD histogram has contracted, suggesting weakening short-term upward momentum. A break above 1.3550 would improve the short-term structure and could lead to a retest of the 1.3600 area; a break below 1.3480 support could see a pullback towards 1.3430. Short-term movements will largely depend on the impact of US inflation data on the US dollar index. Editor's Summary: The GBP/USD pair is currently in a balancing act between a strong dollar and its own internal support. Investors remain cautious ahead of US inflation data releases, awaiting a new directional signal. In the short term, the dollar's performance remains the core factor determining the GBP/USD's direction. If US inflation continues to decline, the market may re-emerge expectations of a Fed policy shift, potentially giving the pound a chance to rebound; however, if energy prices drive inflation higher, the dollar may maintain its advantage. Overall, the GBP/USD pair remains near a key technical area, with the 1.35 level becoming a crucial battleground between bulls and bears. Future price movements will depend on US economic data, global risk sentiment, and changes in Bank of England policy expectations; the market is likely to maintain a volatile pattern.