GBP/USD Firm Above 1.3450 as UK Inflation Cools, Fed Decision Eyed

GBP/USD Holds Firm Above 1.3450 as UK CPI Eases, Fed Rate Call in Focus

The GBP/USD currency pair trades slightly higher at 1.3460 in the early European session on Wednesday, building on bullish momentum after the release of UK inflation data. The British Pound (GBP) shows resilience against the US Dollar (USD), supported by a softer UK Consumer Price Index (CPI) reading for May.

UK Inflation Slows in May

According to the Office for National Statistics (ONS), UK CPI inflation cooled to 3.4% year-on-year (YoY) in May, down from 3.5% in April and matching market expectations. Meanwhile, core CPI, which excludes volatile food and energy prices, declined to 3.5% YoY, lower than April's 3.8% and slightly under the forecast of 3.6%.

On a month-on-month (MoM) basis, CPI inflation came in at 0.2%, in line with consensus but significantly down from 1.2% in April, indicating a slowing pace of consumer price growth.

Fed Rate Decision Awaited

Later on Wednesday, the US Federal Reserve is widely expected to keep interest rates steady at 4.25%-4.50%. However, investor focus will shift to the dot plot projections and Chair Jerome Powell’s comments, looking for signals about the timing of any potential rate cuts this year.

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