• GBP/USD extends its upside as the Fed is widely expected to deliver a rate cut in September.
• Kansas City Fed President Jeffrey Schmid stated that reducing monetary policy could be "appropriate" if inflation remains low.
• The upside of the pair could be restrained due to increased safe-haven flows amid heightened Middle-East tensions.

GBP/USD trades around 1.2770 during the early European hours, appreciating for the second successive day on Friday. This upside of the GBP/USD pair could be attributed to the rising expectations of the US Federal Reserve (Fed) implementing a rate cut in September.

According to the CME FedWatch tool, markets are now fully pricing in a quarter-basis point interest rate cut by the Fed in September. Additionally, the decline in US Treasury yields is exerting additional pressure on the Greenback, with yields standing at 4.01% and 3.97%, respectively, at the time of writing.

Across the pond, the Pound Sterling (GBP) encountered challenges following the Bank of England's (BoE) decision last week to cut interest rates from a 16-year high. The BoE reduced rates by a quarter-point to 5% after a narrow vote among policymakers, who were divided on whether inflation pressures had adequately eased