GBP/USD holds steady at approximately 1.3435 in Thursday’s Asian session. The headline UK CPI saw a notable slowdown, coming in at 2.8% YoY in April, a decrease from 3.3% in March, and not meeting projections. Trump indicated that discussions with Iran are nearing completion, yet cautioned that there could be attacks if the agreement does not succeed. The GBP/USD pair holds steady at around 1.3435 during the Asian trading hours on Thursday.
However, a significant deceleration in UK inflation and ambiguity regarding US–Iran discussions may place downward pressure on the British Pound relative to the US Dollar. Traders are closely monitoring the upcoming preliminary readings of the Purchasing Managers’ Index for May from both the UK and the US, set to be released later on Thursday. The UK headline Consumer Price Index inflation decreased to 2.8% year-over-year in April, down from 3.3% in March, according to data released by the Office for National Statistics on Wednesday. This figure came in below the anticipated 3.0% mark.
Furthermore, the core CPI, which excludes the more volatile food and energy categories, rose by 2.5% year-over-year in April. This figure is down from 3.1% previously and falls short of the market consensus of 2.6%. This UK inflation data, coupled with an unexpected rise in the Unemployment Rate to 5.0%, has prompted traders to lower their forecasts for possible Bank of England rate hikes by December. UK rate futures suggested roughly 52 basis points of Bank of England policy tightening by December, in contrast to about 60 bps on Tuesday, according to reports.
US President Donald Trump stated on Wednesday that discussions with Iran were nearing completion, while cautioning of additional assaults unless Iran consents to an agreement. Meanwhile, Iranian President Masoud Pezeshkian asserted that Tehran was not on the verge of capitulation and warned of retaliation for any strikes with actions extending beyond the Middle East. Ongoing tensions between the US and Iran may bolster the Greenback and create obstacles for the major pair in the near term.