The Pound Sterling has regained some ground after an earlier decline, as the US Dollar weakens ahead of the release of crucial US inflation data. The UK currency initially faced selling pressure following the release of softer-than-expected UK inflation figures, which boosted expectations for potential interest rate cuts by the Bank of England.
UK Inflation Eases, Boosting Rate Cut Bets
The UK’s Consumer Price Index (CPI) showed a slower-than-expected rise, with core inflation decelerating significantly. This data has increased speculation about the possibility of the Bank of England cutting interest rates in the near future. However, persistent service inflation remains a challenge for policymakers.
US Dollar Under Pressure Ahead of CPI Data
The US Dollar is on the defensive as investors await the release of the US Consumer Price Index (CPI). A softer-than-expected reading could intensify expectations for more aggressive interest rate cuts by the Federal Reserve, further weighing on the Greenback.
Technical Outlook for GBP/USD
The GBP/USD pair has recovered from an initial decline, with the 20-day EMA offering support. A sustained move above the recent highs could indicate a resumption of the uptrend. However, a breakdown below the 20-day EMA would increase downside risks.