GBP/USD rebounds toward 1.3450 after losing over 1% in previous session, UK CPI eyed

GBP/USD edges higher ahead of the UK Consumer Price Index data release for May.
The US Fed is widely expected to keep the interest rate unchanged at 4.5% on Wednesday.
The US Dollar may appreciate as safe-haven demand increases amid ongoing geopolitical conflicts in the Middle East.

Akhtar Faruqui FXStreet

GBP/USD edges higher after registering over 1% losses in the previous day, trading around 1.3440 during the Asian hours on Wednesday. Traders will focus on the UK Consumer Price Index (CPI) data for May, scheduled to be released later in the day. The inflation data is anticipated to show that price pressures have cooled down. On Thursday, the Bank of England (BoE) is also expected to keep interest rates steady at 4.25%.

Markets expect the US Federal Reserve (Fed) to keep the interest rate unchanged at the June meeting scheduled later in the North American session. Traders now see a nearly 80% probability of a Fed rate cut in September, followed by another one in October, per Reuters.

Traders will closely observe the Federal Open Market Committee’s (FOMC) statement regarding monetary policy, looking for forward guidance amid persistent tariff uncertainty and rising geopolitical tensions.

However, the GBP/USD pair faced challenges as the US Dollar gained ground amid increased safe-haven demand, driven by increasing geopolitical tensions in the Middle East. Israel and Iran continue their cycle of retaliation. However, Tehran has reportedly urged several countries, including Oman, Qatar, and Saudi Arabia, to urge US President Donald Trump to declare an immediate ceasefire.

On Tuesday, US President Donald Trump posted on his social media platform, calling for Iran’s “unconditional surrender.” Investors are concerned that the United States will participate in the Israel-Iran conflict.

Economic Indicator

Consumer Price Index (YoY)

The United Kingdom (UK) Consumer Price Index (CPI), released by the Office for National Statistics on a monthly basis, is a measure of consumer price inflation – the rate at which the prices of goods and services bought by households rise or fall – produced to international standards. It is the inflation measure used in the government’s target. The YoY reading compares prices in the reference month to a year earlier. Generally, a high reading is seen as bullish for the Pound Sterling (GBP), while a low reading is seen as bearish.

Why it matters to traders?

The Bank of England is tasked with keeping inflation, as measured by the headline Consumer Price Index (CPI) at around 2%, giving the monthly release its importance. An increase in inflation implies a quicker and sooner increase of interest rates or the reduction of bond-buying by the BOE, which means squeezing the supply of pounds. Conversely, a drop in the pace of price rises indicates looser monetary policy. A higher-than-expected result tends to be GBP bullish.

Author

Akhtar Faruqui

FXStreet

Akhtar Faruqui is a Forex Analyst based in New Delhi, India. With a keen eye for market trends and a passion for dissecting complex financial dynamics, he is dedicated to delivering accurate and insightful Forex news and analysis.

GBP/USD extends weekly uptrend, trades above 1.3400

GBP/USD clings to moderate gains and holds above 1.3400 in the European session on Friday. The British Pound gains amid optimism on the UK government leadership transition and Bank of England rate hike bets. Meanwhile, the US Dollar loses ground on Middle East de-escalation and receding Fed rate hike expectations.

EUR/USD rises to 1.1450 area on softer USD

EUR/USD continues to edge higher in the European session on Friday and trades near 1.1450. The US Dollar (USD) struggles to find demand as the US says they are committed to finding a diplomatic solution to end the conflict in the Middle East. Later in the day, the Federal Reserve will publish its Semiannual Monetary Policy Report.

Gold flat lines above $4,100 amid weaker USD, Fed hike bets and Iran risks

Gold reverses a modest Asian session dip to the $4,109-$4,108 region, though it lacks bullish conviction. The US Dollar selling remains unabated for the third consecutive day in the wake of Wednesday's less hawkish FOMC Minutes and offers some support to the commodity. However, prospects of a Fed rate hike in 2026 remain active.

Canada Unemployment Rate forecast to remain unchanged in June

Markets are anticipating a fairly stable report when Statistics Canada releases its Labour Force Survey on Friday. While the Net Change in Employment is predicted to rise by 10K in June, adding to the 87.8K gain in May, the Unemployment Rate is forecast to stay at 6.6%.

Five sessions, one round trip: Why the whipsaw is exactly what Warsh ordered

Markets opened July with a December hike as the base case and spent five trading sessions unlearning and relearning it. A 57K payrolls print bled the tightening bets out of the strip; a re-shut Strait of Hormuz is pushing them back in. Wednesday's minutes from the June Federal Open Market Committee meeting landed mid-round-trip, describing a world that had already stopped existing.

Five sessions, one round trip: Why the whipsaw is exactly what Warsh ordered

Markets opened July with a December hike as the base case and spent five trading sessions unlearning and relearning it. A 57K payrolls print bled the tightening bets out of the strip; a re-shut Strait of Hormuz is pushing them back in. Wednesday's minutes from the June FOMC meeting landed mid-round-trip, describing a world that had already stopped existing.