**GBP/USD Forecast Ahead of UK and US Inflation Data**
*By Crispus Nyaga, as originally reported on Invezz: https://invezz.com/news/2025/07/13/gbp-usd-forecast-ahead-of-uk-and-us-inflation-data/*
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The forex market is bracing for heightened volatility as traders anticipate major inflation data releases from both the UK and the US. The GBP/USD currency pair, often dubbed “Cable,” stands at the crossroads, with economic indicators and central bank policies primed to drive price movement in the days ahead. Both the US Federal Reserve and the Bank of England (BoE) are grappling with persistent inflation, and their decisions will shape the near-term direction of one of the world’s most liquid currency pairs.
### Market Overview: GBP/USD Falters Amid Mixed Signals
The GBP/USD pair struggled to maintain momentum during the previous week, fluctuating within a relatively narrow range and failing to decisively break past key resistance levels. As the market oscillates between risk-on and risk-off sentiment, traders remain wary of placing large directional bets ahead of the pivotal inflation releases.
#### Key recent developments affecting GBP/USD:
– US dollar strength, supported by persistent inflation and hawkish Federal Reserve rhetoric
– Mixed economic data from the UK indicating a fragile recovery
– Uncertainty over timing and magnitude of interest rate cuts from both the Fed and BoE
– A generally cautious tone in global risk markets, prompting some safe-haven flows into the US dollar
### US Inflation Data: The Crucial Catalyst
The US Labor Department is scheduled to release fresh inflation statistics this week. These figures are closely watched by forex traders and investors as they provide critical insight into the Federal Reserve’s policy trajectory. Recent data has shown that US inflation remains stubbornly above the Fed’s 2% target, casting doubt on the timeliness of any interest rate cuts.
#### What to watch in the US inflation report:
– The headline CPI (Consumer Price Index) and core CPI readings on a month-over-month and year-over-year basis
– Any signs of broadening price pressures, particularly in core categories like shelter and services
– Fed officials’ commentary following the release, gauging the likelihood of rate cuts at upcoming FOMC meetings
If US inflation data comes in higher-than-expected, it could reinforce the Fed’s hawkish stance and inject renewed strength into the US dollar – potentially sending GBP/USD lower. Conversely, softer-than-expected figures could revive hopes for imminent Fed easing, offering Cable some relief.
### UK Inflation and BoE Policy Outlook
On the other side of the Atlantic, the UK is confronting its own inflation challenge. While consumer prices have eased from their 2022 peaks, inflationary pressures remain sticky, especially in the services sector. The coming week’s data will be pivotal in informing market expectations regarding Bank of England policy.
#### UK inflation data and its impact:
– Analysts expect UK CPI to remain elevated, though incremental declines may be apparent due to softer energy prices
– The services component will be under scrutiny, as it signals underlying price momentum relevant to the BoE’s decision
– Wages and labor market data will also factor into the BoE’s calculus on when and by how much to cut rates
If the UK inflation numbers surprise to the upside, markets may push back expectations for the BoE’s first rate cut, supporting sterling. Conversely, disappointment in the data could accelerate bets on monetary easing, weighing on GBP.
### Technical View: GBP/USD Chart Patterns
From a technical analysis perspective, GBP/USD maintains a choppy outlook on the daily chart, oscillating between the 1.2650 and 1.2850 levels. Key moving averages and momentum indicators reflect the ongoing tug-of-war between bulls and bears.
#### Technical highlights:
– The 50-day and 200-day moving averages have converged near 1.2750, acting as a magnet for price and a
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