The GBP/USD pair edged lower during Wednesday’s Asian trading session, retreating slightly from the previous day’s surge to a four-month high of 1.2965. Despite trading near 1.2935, the pair’s downside appears constrained as investors await key US inflation data for further direction.
US CPI Data to Drive Market Sentiment
The upcoming US Consumer Price Index (CPI) report is expected to significantly impact expectations surrounding the Federal Reserve’s interest rate policy. Market participants are closely watching whether the data will reinforce the growing consensus that the Fed will implement multiple rate cuts this year due to concerns over a tariff-driven economic slowdown.
In the meantime, the US Dollar is seeing modest recovery after plunging to its lowest level since mid-October, as traders reposition themselves ahead of the crucial CPI release. However, any substantial USD appreciation remains uncertain amid speculation of a prolonged Fed easing cycle.
BoE Policy Outlook Supports GBP
The British Pound continues to find support from expectations that the Bank of England (BoE) will take a more measured approach to rate cuts compared to its global counterparts, including the Fed. This divergence in monetary policy outlooks could help limit GBP/USD losses and maintain a bullish bias in the medium term.
Technical Outlook: Bullish Momentum Remains Intact
From a technical standpoint, last week’s sustained breakout above the critical 200-day Simple Moving Average (SMA) is seen as a bullish signal, reinforcing the view that the pair’s path of least resistance remains to the upside. Any corrective pullbacks are likely to be viewed as buying opportunities, with strong support expected to limit further declines.
With the market awaiting the US CPI data, GBP/USD may remain range-bound in the near term, but the broader trend still favors further gains.
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