Pound Sterling Slips Against USD as Markets Await May US CPI Inflation Data

Pound Sterling Slips vs. US Dollar Ahead of Key US Inflation Report

GBP/USD Weakens on UK Data, Fed Expectations

The Pound Sterling (GBP) slipped to around 1.3480 against the US Dollar (USD) in late trading on Wednesday, with markets showing caution ahead of the United States Consumer Price Index (CPI) release for May. The GBP/USD pair came under pressure following soft UK labor market data, which increased expectations of an August rate cut by the Bank of England (BoE).

US Dollar Supported by Strong CPI Expectations

Meanwhile, the US Dollar Index (DXY) continues to hover near 99.00, reflecting a solid performance by the Greenback across major currencies. Anticipation is growing that US CPI data may confirm stronger inflationary pressures:

Headline CPI YoY: Expected to rise to 2.5% from 2.3%
Core CPI YoY: Projected to increase to 2.9% from 2.8%
Monthly CPI figures: Estimated at 0.2% (headline) and 0.3% (core)

A strong inflation report would reinforce the Fed’s cautious stance, possibly delaying rate cuts until further clarity emerges on the US trade and tariff policy, particularly as President Donald Trump resumes office.

Easing Trade Tensions Offer Limited Support

Market sentiment has slightly improved after US-China trade tensions appeared to cool during recent talks in London, but the optimism remains subdued as traders await inflation-related policy cues from the Federal Reserve (Fed).

Outlook: Fed & BoE Divergence Widens

With the BoE signaling dovish intentions and the Fed potentially holding rates steady, the GBP/USD pair may continue facing downward pressure. A hotter-than-expected US CPI print could drive the Dollar higher, further challenging the Pound’s outlook.