Anna 
The GBP/USD pair remains subdued around the 1.2540 mark, facing downward pressure attributed to a strengthened US dollar following the release of higher-than-anticipated US Consumer Price Index (CPI) figures.
March’s CPI data reaffirmed persistent inflationary trends, prompting a reassessment of market expectations for the Federal Reserve’s (Fed) monetary policy timeline. The likelihood of the first rate cut, initially anticipated in June, has now been pushed back to September, reflecting increased caution regarding the pace of policy easing amidst ongoing inflationary pressures. This adjustment is evidenced by data from the Fed Funds Futures market via the CME FedWatch Tool. Notably, US inflation surged by 0.4% month-on-month in March, resulting in an annual inflation rate of 3.5%. The Core CPI, excluding volatile food and energy components, mirrored this increase, rising by 0.4% and registering an annual growth of 3.8%. The CPI figures surpassed expectations, sparking notable reactions in the Forex market.
The trajectory of the British pound hinges on forthcoming economic indicators from the UK, notably the release of February’s monthly Gross Domestic Product (GDP) and Industrial Production figures scheduled for Friday. Speculation looms regarding a potential interest rate cut by the Bank of England (BOE) at its upcoming June meeting. Any dovish commentary from BOE officials could catalyze a bearish sentiment in GBP/USD.
GBP/USD exhibited marginal gains during the Asian and early European trading sessions ahead of today’s release of the US Producer Price Index (PPI) report at 12:30 p.m. UTC. A PPI reading surpassing expectations might prompt the Fed to prolong the maintenance of elevated interest rates, further bolstering the US dollar and exacerbating downward pressure on GBP/USD. Conversely, lower-than-expected PPI data could fuel bullish momentum, potentially propelling the pair towards the 1.26000 level. Traders remain attentive to evolving economic indicators and central bank commentary for insights into currency market dynamics.
