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- GBP/USD flatlines near 1.3435 in Thursday’s Asian session.
- The headline UK CPI slowed sharply to 2.8% YoY in April from 3.3% in March, missing the forecast.
- Trump said negotiations with Iran are in the final stages but warned of attacks if the deal fails.
The GBP/USD pair holds steady around 1.3435 during the Asian trading hours on Thursday. However, a sharp slowdown in UK inflation and uncertainty surrounding US–Iran talks could weigh on the British Pound (GBP) against the US Dollar (USD). Traders await the preliminary readings of the Purchasing Managers’ Index (PMI) for May from the UK and the US, which are due later on Thursday.
The UK headline Consumer Price Index (CPI) inflation eased to 2.8% over the year in April from 3.3% in March, the Office for National Statistics (ONS) showed on Wednesday. This figure came in softer than the expectation of 3.0%. Additionally, the core CPI, excluding volatile food and energy items, rose 2.5% year-over-year in April, versus 3.1% prior and below the market consensus of 2.6%.
This UK inflation data, combined with an unexpected rise in the Unemployment Rate to 5.0%, prompted traders to scale back expectations for future Bank of England (BoE) rate hikes by December. UK rate futures pointed to around 52 basis points (bps) of BoE policy tightening by December, versus about 60 bps on Tuesday, according to Reuters.
US President Donald Trump said on Wednesday that negotiations with Iran were in the final stages, while warning of further attacks unless Iran agrees to a deal. Meanwhile, Iranian President Masoud Pezeshkian stated that Tehran was not on the brink of giving in and threatened to retaliate for any strikes with attacks beyond the Middle East. Ongoing tensions between the US and Iran could lift the Greenback and act as a headwind for the major pair in the near term.
