The GBP/USD pair extended its winning streak into a seventh consecutive session on Wednesday, climbing to a fresh six-month high of 1.3256 before settling around 1.3250 during the Asian session. The pair’s bullish momentum continues to be underpinned by improved global risk appetite and cautious optimism over the UK’s economic outlook.
Pound Rises on Risk Sentiment, Labor Data Steady
Sterling has gained strength as investors cheered US President Donald Trump’s move to exempt key technology products from his proposed “reciprocal” tariffs, easing fears of a global trade war. This shift in sentiment has weighed on the US Dollar and fueled demand for risk-sensitive currencies, including the British Pound.
On the domestic front, UK labor market data released Tuesday showed the unemployment rate holding steady at 4.4% in February, meeting market expectations. Wage growth, however, remained resilient, keeping pressure on the Bank of England (BoE) to stay vigilant on inflation risks.
Despite the wage strength, market participants are firmly betting on monetary easing ahead. Interest rate futures are pricing in a 90% chance of a rate cut at the BoE’s May policy meeting, with two more cuts anticipated later in 2025.
CPI Data Eyed for Further Clues
Traders are now turning their attention to the UK’s Consumer Price Index (CPI) report for March, due later today. Core CPI, which strips out volatile components such as food and energy, is expected to remain unchanged at 3.5% year-over-year. A softer-than-expected print could reinforce market expectations for BoE rate cuts, potentially capping further gains in GBP/USD.
US Dollar Remains Under Pressure Ahead of Retail Data
The US Dollar Index (DXY) continues to weaken, trading near 99.80. A combination of trade policy uncertainty and fading rate hike expectations has dragged on the greenback. Focus now shifts to US Retail Sales data for March, which could offer fresh insights into the economic impact of recent tariff developments and consumer sentiment.
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