GBP/USD weakens to near 1.3550 on modest US Dollar strength

• GBP/USD softens to around 1.3555 in Monday's early Asian session. 
• A cautious mood ahead of the US-Ukraine meeting underpins the US Dollar. 
• UK economy grows by better-than-expected 0.3% QoQ in the second quarter.

The GBP/USD pair loses ground to near 1.3555 during the early Asian session on Monday, pressured by a firmer US Dollar (USD). Markets turn cautious ahead of a meeting between US President Donald Trump and Ukrainian President Volodymyr Zelenskiy later on Monday. The UK July Consumer Price Index (CPI) inflation report will be released on Tuesday. 

The Greenback strengthens as caution prevails before Trump's talks with Zelenskiy. Traders await the Trump-Zelenskiy meeting in Washington on Monday, as it might offer some hints about a ceasefire deal or new sanctions on Russia or buyers of its crude. Any signs of persistent geopolitical tensions might boost the safe-haven demand and create a headwind for the major pair in the near term.  

Nonetheless, the upbeat UK Gross Domestic Product (GDP) report for the second quarter (Q2) could provide some support to the Cable. The UK economy slowed less than expected in Q2 despite the shock of US trade tariffs and a weaker jobs market, rising 0.3% QoQ versus a 0.7% growth in Q1. This figure came in stronger than the expectation of a 0.1% expansion in the reported period.

The attention will shift to the UK CPI inflation data on Tuesday for a fresh impetus. The core CPI is expected to show an increase of 3.7% YoY in July. If the data shows a hotter-than-expected outcome, this could reduce market expectations for the Bank of England (BoE) to cut rates in September, which might lift the GBP against the USD. Markets are now fully pricing another reduction only in February 2026, according to LSEG data.