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During Thursday's Asian session, the GBP/USD pair enters a bearish consolidation phase and oscillates in a narrow range just above a nearly one-month low, around the 1.2680 region reached the day before. Spot prices are currently around 1.2700 as traders appear reluctant to place aggressive wagers and prefer to await the Bank of England's (BoE) latest monetary policy update, due later today.

A significant deceleration in the headline UK CPI, to 7.9% YoY in June from 8.7% in May, could force the UK central bank to revert to a 25 bps rate hike. This action will increase the benchmark interest rate to 5.25 percent, the highest level since December 2007. However, some investors anticipate another 50 basis point rate hike as inflation remains significantly above the BoE's objective of 2%. Consequently, the accompanying monetary policy statement and the post-meeting press conference will remain the focal point. Against the backdrop of recent fluctuations in expectations regarding the future rate-hike path, the outlook will play a significant role in influencing the British Pound and provide fresh directional impetus for the GBP/USD pair.

The underlying bullish sentiment surrounding the US Dollar (USD) is expected to operate as a headwind for spot prices in the interim. In fact, the USD Index (DXY), which tracks the Greenback against a basket of currencies, is near its highest level since July 7 and continues to be supported by expectations that the robust US economy will enable the Federal Reserve (Fed) to maintain higher interest rates for an extended period of time. The optimistic US ADP report revealed that private-sector employers added 324K jobs in July, as opposed to the 189K expected. This overshadows the US credit rating downgrade by Fitch and continues to support elevated US Treasury bond yields, which supports the USD and limits the GBP/USD exchange rate.

In addition to the key central bank event risk, traders will be confronted with the publication of US macro data - the usual Weekly Initial Jobless Claims, the ISM Services PMI, and Factory Orders - in the early North American session on Thursday. This, along with US bond yields and broader risk sentiment, will drive USD demand and contribute to the creation of GBP/USD short-term trading opportunities. The market's focus will then shift to Friday's highly anticipated NFP report, also known as the US employment report.

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