GBP/USD remained largely stable in early Asian trading on Friday, trading around 1.3510, with upward momentum waning. The market remained cautious ahead of the US August CPI release, with investors hesitant to establish large directional positions, resulting in a period of consolidation for the pound against the dollar before the data announcement. Previously released US August PPI data had already signaled continued inflationary pressures. Data from the US Bureau of Labor Statistics showed that the August PPI rose 5.4% year-on-year, significantly higher than the revised 4.8% in July and also higher than the market expectation of 5.3%; the month-on-month increase was 0.4%, in line with market expectations. Core PPI rose 0.2% month-on-month, slightly lower than previously expected. The accelerated year-on-year growth in PPI has reinforcing market concerns about sticky US inflation and pushed expectations for a Fed rate hike in September to around 70%. Meanwhile, the yield on 10-year US Treasury bonds is approaching 5%, and the US dollar index remains around 99, indicating the dollar remains relatively strong overall. For GBP/USD, rising US interest rate expectations typically increase the relative attractiveness of the dollar, thus putting downward pressure on the pound against the dollar. If the US August CPI is higher than expected, the market may further increase expectations that the Fed will maintain a tight policy, potentially giving the dollar new upward momentum, while GBP/USD may test recent key support levels. Currently, the market expects the overall US CPI to rise 3.4% year-on-year in August, the core CPI to rise 2.4% year-on-year, and the month-on-month increases to be 0.4% and 0.2%, respectively. The US Bureau of Labor Statistics has confirmed that the August CPI will be released on September 11. It is worth noting that oil prices have recently broken through $100 again, posing a new upside risk to the US inflation outlook. Rising energy prices will not only directly push up consumer prices such as gasoline but may also be passed on to other goods and services through transportation and production costs. Therefore, if oil prices remain high, the risk of a renewed acceleration in overall US inflation may increase, further impacting the Federal Reserve's policy expectations. This means that the market impact of this CPI may come not only from core inflation itself, but also from changes in energy prices. If the overall CPI rebounds significantly due to energy costs, while the core CPI remains relatively moderate, the market may focus more on the inflation structure; if both the overall and core indicators are higher than expected, the dollar's interest rate advantage may further expand. In the UK, the pound is also supported by expectations of the Bank of England's policy. Bank of England Governor Bailey previously stated that future interest rate hikes should not be seen as an inevitable process, but rather should be judged based on changes in the economic and geopolitical environment. This means that while the Bank of England still faces inflationary pressures, its policy path is not entirely certain. The market currently expects the Bank of England to implement another 25 basis point rate hike this year, and anticipates further tightening in 2027. Future UK employment and inflation data will be crucial in determining the Bank of England's policy direction. The UK's fiscal situation is also a significant factor influencing pound sentiment. The market is focused on the budget at the end of October; given the continued uncertainty surrounding fiscal policy, the pound's medium-term performance may be influenced by both the fiscal outlook and economic growth expectations. However, from a market sentiment perspective, the pound is currently maintaining a relatively constructive performance. Therefore, GBP/USD is currently facing a clear two-way battle. On the one hand, rising US PPI, a stronger dollar, and rising US Treasury yields are limiting further gains for the pound; on the other hand, the Bank of England's potentially hawkish policy stance and the pound's own relative resilience provide some support on the downside. In the short term, the true direction of GBP/USD still depends on confirmation from the US CPI. If the CPI is higher than expected, the dollar and US Treasury yields may strengthen further, and GBP/USD may retest the 1.3465-1.3445 area; if the CPI is lower than expected, market bets on further tightening by the Fed may cool, and a weaker dollar will provide room for a rebound in the pound, potentially leading to a retest of 1.3560. Before the release of US inflation data, the market is more likely to maintain range-bound trading rather than forming a clear one-sided trend. In addition to focusing on CPI and core CPI, it is also necessary to observe the synchronized changes in the dollar index, US Treasury yields, and international oil prices, as these variables may jointly determine the direction of GBP/USD's fluctuations after the data release. From a daily chart perspective, GBP/USD is currently in a range-bound trading pattern, with the price remaining above the 100-day simple moving average, indicating that the medium-term structure has not yet shown significant weakness. However, the price is currently trading near the lower Bollinger Band, and is still facing resistance from the middle Bollinger Band. The RSI is around 48, indicating neutral market momentum and no clear bullish or bearish trend has yet formed. The first resistance level to watch is the middle Bollinger Band around 1.3560; a decisive break above this level would target the upper Bollinger Band around 1.3655. On the downside, the first support level to watch is the lower Bollinger Band around 1.3465, followed by the 100-day moving average around 1.3445. A decisive break below 1.3445 on the daily chart could signal a deeper correction in the current range-bound structure. From a 4-hour chart perspective, GBP/USD is maintaining a short-term consolidation, with the 1.3500 level being a key psychological level for both bulls and bears. If the US CPI is lower than expected and pushes the dollar lower, the exchange rate could rise back above 1.3560 and potentially test the 1.3600 and 1.3655 areas further. Conversely, if the CPI is higher than expected and strengthens the dollar and US Treasury yields, a break below 1.3500 for GBP/USD could lead to a retest of 1.3465, with a further break below that level targeting 1.3445. Overall, a clear breakout has not yet formed on the 4-hour chart, and the short-term direction largely depends on the US inflation data. In summary, GBP/USD is currently at the intersection of US inflation expectations and Bank of England policy expectations. After the US PPI rose to 5.4% year-on-year, the US dollar and US Treasury yields received support, limiting further upside for the pound. However, the Bank of England's potentially hawkish stance and the relatively stable market sentiment for the pound provided some buffer for the exchange rate. The most important short-term catalyst remains the US August CPI. If inflation exceeds expectations, GBP/USD may fall back to around 1.3445; if inflation cools, the pressure on the US dollar will ease, and the exchange rate is expected to rebound towards the 1.3560 and 1.3655 areas.