GBPUSD climbed above $1.34 on Wednesday, reaching an intraday high of $1.3420 from an opening level of $1.3380, after the UK posted a hotter-than-expected inflation reading. The move puts the currency pair on track to snap a four-day losing streak, which had seen it drop below its 50-day simple moving average.
According to the Office for National Statistics, UK headline inflation rose to 3.6% in June, beating forecasts of 3.4% and rising from May’s 3.4% level. The unexpected acceleration in consumer prices raises fresh doubts over the Bank of England’s (BoE) ability to proceed with planned rate cuts in the near term.
Adding to the hawkish pressure, core inflation — which excludes volatile items like food and energy — ticked up to 3.7%, from 3.5% in May. According to ONS chief economist Richard Heys, the upside surprise was driven largely by motor fuel prices, which didn’t fall as much as expected compared to last year.
The data lands just ahead of the BoE’s next policy meeting, where markets had been pricing in a 25 basis point rate cut as soon as this summer. But with inflation proving sticky, traders are now questioning how soon — or how safely — the central bank can loosen policy without reigniting price pressures.
This all unfolds as global markets brace for macro crosswinds, including US inflation surprises and an upcoming August 1 tariff deadline from former US President Donald Trump that could weigh on broader sentiment.
While the pound’s recovery above $1.34 hints at buyer interest following the recent slide, momentum may hinge on the BoE’s tone and evolving geopolitical risks in the weeks ahead.
