• GBP/USD strengthens to around 1.3435 in Thursday’s early European session.
• UK CPI inflation grew at a faster-than-projected pace in December, supporting the Pound Sterling. 
• Trump said he would not impose tariffs, easing geopolitical and trade tensions.

The GBP/USD pair gains ground to near 1.3435 during the early European session on Thursday. The Pound Sterling (GBP) edges higher against the US Dollar (USD) as UK inflation rose more than expected in December. Markets might turn cautious later in the day ahead of a slew of US economic data. 

The Cable receives some support from a hotter-than-expected UK Consumer Price Index (CPI) inflation report. The headline CPI rose 3.4% YoY in December, compared to an increase of 3.2% in November, the Office for National Statistics showed on Wednesday. This reading came in above the market consensus of 3.3%. The monthly CPI inflation climbed to 0.4% in December from a decline of 0.2% in November. Markets projected a rise of 0.4%.

Nonetheless, US President Donald Trump on Wednesday withdrew a threat to impose tariffs on a number of European nations, easing geopolitical and trade tensions. This, in turn, could lift the Greenback against the GBP. Trump also said that he has reached a framework for a deal with NATO over Greenland, but did not offer any details in a post to his Truth Social platform about what that would entail.  

Traders will keep an eye on the final reading of US Gross Domestic Product (GDP) for the third quarter (Q3), weekly Initial Jobless Claims and Personal Consumption Expenditures (PCE) Price Index data. If these reports show better-than-expected outcomes, this could underpin the USD and create a headwind for the major pair. 

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