- US PPI slowed to 2.3% year-on-year, raising speculations of a Fed cut in July.
- Trump reportedly believes he has displaced Federal Reserve Chairman Powell, adding to market volatility.
- UK CPI surged to 3.6% year-on-year, the highest since January 2024, diminishing BOE cut prospects.
In currency news, GBP/USD has reversed its trend, gaining after the latest US PPI data stoked hopes for potential interest rate cuts by the Federal Reserve. Meanwhile, inflation rates in the UK have surprised investors. As of this moment, the pair saw a rise of 0.55%, sitting at 1.3454.
Cable surges to 1.3454 amid US factory price data and speculation around Trump
The US producer price index indicated that factory prices held steady in June, with PPI dropping from 2.6% to around 2.3%, which is below expectations. The core price also fell from 3% to 2.6%, which was below the predicted 2.7%.
A Reuters source mentioned that “the inflation threat is very real, and if it doesn’t eliminate the possibility of Fed rate cuts in July, we won’t make any changes.” In upcoming meetings, it’s expected that the Fed will adjust rates in the 4.25% to 4.50% range, with a likelihood of 96.9% for a change.
Simultaneously, US President Donald Trump reportedly expressed to Republican lawmakers whether Fed Chairman Jerome Powell should be dismissed, as CBS News has reported.
In the UK, inflation hit a peak not seen since January 2024, with the CPI at 3.6% year-on-year, which has reduced the expectations for interest rate cuts by the Bank of England. Analysts had anticipated a rise only to 3.4%. Core CPI also increased, reaching 3.7%, up from 3.5%.
While some data suggest rate cuts are on the horizon, investors already anticipated an 80% probability of a 25 basis point cut in August.
GBP/USD price forecast: Technical outlook
The GBP/USD remains on an upward trend, finding support around 1.3369 as of June 23rd, with sellers struggling to push it down below 1.3350. Bullish momentum is evident, bolstered by Trump’s comments, as per the Relative Strength Index (RSI).
Should GBP/USD stay above 1.3400, it might test the 50-day SMA at 1.3495 soon. Resistance levels are likely around 1.3500 and further up at 1.3581, which corresponds to the 20-day SMA. Conversely, a drop below 1.3350 could lead to a test of the 100-day SMA around 1.3270.
