The main factors contributing to the strengthening of GBP/USD are the positive Chinese Consumer Price Index (CPI) data in August and the ongoing contraction in the Producer Price Index (PPI) throughout the year. This has created hope that the world's second-largest economy will significantly stabilize this year, coupled with expectations of additional stimulus measures from China to boost its economy.

Andrew Bailey, the Governor of the Bank of England (BoE), cautioned on Wednesday that borrowing costs could continue to rise due to persistent high inflation rates. However, Bailey also mentioned that the BoE is starting to consider halting interest rate hikes, which could have a significant impact on GBP/USD.

Investors are also taking a cautious approach, waiting for key data releases this week from both the United Kingdom and the United States. This includes the UK's employment report on Tuesday, followed by the UK's monthly GDP figures and the latest US inflation data on Wednesday, as well as the US Producer Price Index (PPI) on Thursday.

Source: Fxstreet