The UK is set to release its April Consumer Price Index (CPI) data on Wednesday at 06:00 GMT, with forecasts pointing to a notable rise in both monthly and annual inflation figures. According to market expectations:
- Monthly CPI: Forecast at 1.1% (previous: 0.3%)
- Annual CPI: Projected at 3.3% (previous: 2.6%)
- Core CPI YoY: Forecast to rise to 3.7% from 3.4%
This anticipated surge could place further pressure on the Bank of England (BoE) to reconsider its dovish leanings, especially as price growth moves well above the central bank’s 2% inflation target.
🏦 BoE Caught in Crosswinds: Growth vs. Inflation
The BoE recently lowered its policy rate from 4.5% to 4.25%, with five out of nine Monetary Policy Committee (MPC) members supporting the decision. Two officials voted for a deeper cut, while two preferred to keep rates unchanged — underscoring the division inside the central bank amid mounting global uncertainties.
Policymakers have warned of rising inflation in the short term, largely due to energy costs and global trade disruptions. They also referenced the volatility stemming from U.S. trade policy under President Donald Trump, noting that ongoing tariffs could complicate inflation management.
⚠️ Inflation Outlook and Market Expectations
If the April CPI data exceeds forecasts, it may reinforce expectations that the BoE will adopt a more hawkish tone, delaying future rate cuts or even pausing further easing altogether. Conversely, if inflation falls short, it could justify additional policy loosening to support the economy.
The April CPI release is being seen as the biggest test of 2025 for the BoE’s inflation credibility and policy roadmap.
💷 GBP/USD Forecast: Bulls Eye 2025 Highs on Dollar Weakness
Ahead of the CPI announcement, GBP/USD is trading comfortably above the 1.3300 mark, fueled by a broadly weaker U.S. Dollar following a credit downgrade by Moody’s, which lowered the U.S. sovereign rating from Aaa to Aa1.
The pair is currently trading about 100 pips below its 2025 peak of 1.3445. A stronger-than-expected inflation reading could propel the pound higher, possibly toward the next resistance levels.
📈 GBP/USD Technical Outlook
Support Levels:
- 1.3300 – Supported by the 20-day Simple Moving Average (SMA)
- 1.3250 – Near-term floor
- 1.3140 – Monthly range bottom
Resistance Targets:
- 1.3445 – 2025 high
- 1.3500 – Psychological barrier
- 1.3560 – September 2022 peak
Technical Summary:
The pair is in a consolidation phase but retains a bullish bias as it holds above key moving averages. A daily close above 1.3400 could confirm a breakout and target the 1.3500 – 1.3560 zone.
🔍 What to Watch
- 🔹 April CPI release at 06:00 GMT
- 🔹 BoE reaction to inflation data
- 🔹 GBP/USD performance around the 1.3400 level
- 🔹 Ongoing global trade negotiations and tariff risks
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