Pound Sterling Edges Higher as Markets Await Key US and UK Data

The Pound Sterling (GBP) regained some ground against the US Dollar (USD) on Friday, trading near 1.3540 after Thursday’s sharp pullback triggered by hotter-than-expected US Producer Price Index (PPI) figures. The bounce comes as traders shift focus toward upcoming economic data and high-profile geopolitical meetings.

US Inflation Data Keeps the Dollar Supported

Thursday’s PPI report revealed that US wholesale prices rose at their fastest pace in three years, climbing 0.9% in July after remaining flat in June. The jump was driven in part by tariff-related costs being passed on to consumers, strengthening the US Dollar and cooling expectations for aggressive Federal Reserve rate cuts in September.

The US Dollar Index (DXY) eased slightly to around 98.05 on Friday but held most of its gains from the previous session, having rebounded from a two-week low near 97.60. Market pricing from the CME FedWatch Tool still indicates a possibility of a September rate cut, though the probability has dipped following the PPI release.

GBP Sentiment Turns Cautious Ahead of UK CPI

Sterling’s recovery remains modest as investors await the UK’s July Consumer Price Index (CPI) report, due Wednesday, which could shape the Bank of England’s (BoE) next policy move. Elevated inflation and better-than-expected second-quarter GDP growth — up 0.3% versus 0.1% expected — have given the BoE room to maintain current interest rates.

However, economists warn of potential headwinds in the months ahead, including soft global demand, higher taxes anticipated in the Autumn Budget, and ongoing trade risks. UK Chancellor Rachel Reeves is widely expected to raise taxes to offset the cost of increased welfare spending.

US Retail Sales and Trump-Putin Talks in Focus

Later on Friday, US Retail Sales data for July will take center stage, with economists forecasting a 0.5% monthly increase, slightly below June’s 0.6% rise. Markets will also be closely watching the Alaska meeting between US President Donald Trump and Russian President Vladimir Putin, where discussions are expected to focus on ending the war in Ukraine. Trump has expressed optimism that Putin is willing to pursue peace, though he suggested a follow-up meeting involving Ukraine’s leadership may be necessary.

GBP/USD Technical Outlook

The GBP/USD pair is holding above the 20-day Exponential Moving Average (EMA) at 1.3450, maintaining a bullish bias despite Thursday’s pullback from the two-month high at 1.3600.

• Immediate support: 1.3400 (August 11 low)
• Resistance: 1.3790 (July 1 high)
• Momentum: The 14-day Relative Strength Index (RSI) is hovering near 60, with a breakout above this level potentially signaling renewed bullish momentum.

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