The Pound Sterling (GBP) consolidates in a tight range near 1.2750 against the US Dollar (USD) in Tuesday's European session. The GBP/USD pair trades sideways as investors focus on the United States (US) Consumer Price Index (CPI) data for November, which will be published on Wednesday.

Economists expect the annual headline inflation to have accelerated to 2.7% from the October reading of 2.6%. In the same period, the core CPI which excludes volatile food and energy prices is expected to have risen steadily by 3.3%. The month-on-month headline and core CPI are estimated to have grown steadily by 0.2% and 0.3%, respectively.

Unless there is a dramatic deviation from what's expected, the impact of the inflation data shouldn't significantly change market expectations for the Federal Reserve's (Fed) likely interest rate action in the policy meeting on December 18. Recent commentaries from a string of Fed officials have indicated that they are confident about inflation remaining on a sustainable path towards the bank's target of 2%.

However, Fed Governor Michelle Bowman, a well-known hawk, said on Friday that the central bank should "proceed cautiously and gradually in lowering the policy rate, as inflation remains elevated."

There is an almost 90% chance that the Fed will reduce interest rates by 25 basis points (bps) to 4.25%-4.50%, according to the CME FedWatch tool.

In Tuesday's session, investors will focus on the Q3 Unit Labor Costs data, which will be published at 13:30 GMT. The economic data will indicate the total cost borne by employers for employing the labor force. The Unit Labor Cost data is estimated to have grown steadily by 1.9% compared to the previous quarter.(Cay) Newsmaker23

Source: Fxstreet