The GBPUSD exchange rate will be tested by consumer price inflation data released on Wednesday.
GBPUSD – Daily Chart
GBP/USD has rallied strongly over the past two days and is now approaching resistance at 1.3500. The first support comes in at 1.3340.
The monthly consumer price data from the UK is expected to come in at 0.4% after a -0.2% drop last month. The year-on-year figure is expected to show a reading of 3.3%, up by 0.1%.
Food inflation has been a problem for the United Kingdom, and BRC data showed that it was rising again in August. That could add upside risk to Wednesday’s number, which is released at 2 pm HKT.
Interest rates in the UK should be cut by more this year, a senior Bank of England policymaker said recently.
Alan Taylor, an external member of the Bank’s monetary policy committee, said slowing inflation, driven by cooling energy prices and measures to cut living costs, should get inflation back to its 2% target by mid 2026.
“Interest rates should continue on a downward path, that is if my outlook continues to match up with the data, as it has done over the past year,” Taylor said.
Taylor also said there were risks to global trade from Donald Trump’s tariff wars and mounting geopolitical tensions, which worsened in the last week.
“Over the long arc of history, the tendency is for trade barriers to be broken down. And despite current tensions, there is still capacity for global trade to accelerate; powered by AI technologies and the ascent of developing nations,” he added.
Despite expectations of lower rates, the pound is rallying, which could bring downside risk if resistance arrives amid weaker price inflation data.
