The pound, paired with the dollar, is trading in the range of 1.2770–1.2830, alternately starting from the boundaries of this channel. Since last Friday, when the disappointing June Nonfarms were published, the pair has been trying to gain a foothold within the 28th figure, but sellers counterattack every time, preventing it from steadily settling above the 1.2800 target.The movements of the US dollar index primarily drive the fluctuations in the GBP/USD pair. Following Jerome Powell's contradictory Senate testimony, the greenback has been indecisive, which left more questions than answers. Powell indicated that all options are on the table, depending on inflation dynamics. He emphasized that the Fed needs to ensure that inflation is slowing sustainably and that it's premature to draw such conclusions based on May's reports alone. This implies that if June (some of which will be released tomorrow) and July inflation data (due in August) continue to show a downward trend, the Fed might begin easing monetary policy at the September meeting. Otherwise, the regulator is likely to maintain a wait-and-see stance.

Given Jerome Powell's position, the importance of inflation reports, including those to be released in the next couple of days, is greatly magnified. Specifically, on Thursday, the US will release the June Consumer Price Index (expected to show a year-over-year slowdown in the overall CPI and stagnation in the core CPI), and on Friday, the Producer Price Index (expected to show stagnation in the overall PPI and an acceleration in the core PPI). If the figures are in the "green zone," the prospect of a September rate cut will again be in doubt, boosting the dollar. Currently, the market assesses the likelihood of easing monetary policy at the September meeting at 75%. A "cold shower" in the form of accelerating inflation will allow dollar bulls to show strength, including against the pound. Conversely, if the reports are in the "red zone," it will be more certain that the Fed will begin cutting rates in early autumn, with the dollar reacting accordingly.However, not only the US releases will set the tone for trading tomorrow. On Thursday, we will also learn key data on UK economic growth. The reports will either reinforce or weaken confidence that the Bank of England will cut interest rates in August.According to preliminary forecasts, UK GDP is expected to grow by 0.2% in May month-over-month, following zero growth in the previous month. Industrial production is expected to increase by 0.3% month-over-month (after a 0.9% decline in April) and by 0.5% year-over-year (after a 0.4% decline). Manufacturing production is also expected to rise by 0.3% month-over-month and 0.7% quarter-over-quarter. Construction output is expected to grow by 0.8% month-over-month in May (previous value -1.4%) and by 0.2% year-over-year.As we can see, preliminary forecasts indicate a positive trend in the main indicators. The pound will receive substantial support if the figures meet at least the forecast levels (not to mention being in the "green zone"). Currently, the probability of a rate cut by the Bank of England is estimated at around 55-60% (with inflation in the services sector being the main obstacle to easing monetary policy). Strong growth in the UK economy will allow BoE members to maintain a wait-and-see approach at the next meeting on August 1. At the very least, proponents of maintaining the status quo will have more arguments to support their stance. Although June inflation (due on July 17) will play a decisive role in the August meeting's outcome, tomorrow's reports could trigger significant volatility in the GBP/USD pair, especially if they resonate with US data. That is, stronger UK economic growth coinciding with a significant slowdown in US CPI or vice versa: a "red" British release against "green" US figures, creating a "perfect storm."Given such a high degree of uncertainty, it is not necessary to talk about the possible direction of the price now. The pair is on the verge of two important tests, as a result of which the fundamental picture for GBP/USD may change significantly. Therefore, at the moment, it is advisable to maintain a wait-and-see position for the pair, waiting for the results of tomorrow. All attention is on American inflation and British GDP growth data.

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