GBPUSD Falls After US Inflation Report Shocks

GBPUSD Analysis – After a surprisingly high US inflation report, the British pound dropped to $1.26. This development dampened the hope that the Federal Reserve would lower interest rates this year. Instead of the expected cuts, the market now foresees a slight easing of about 50 basis points from the Fed, while the UK might see about 70 basis points in reductions.

In a recent move, the Bank of England decided to keep the borrowing rates steady at 5.25%, a peak not seen in 16 years. This decision came as two of its most aggressive members reversed their previous stance on pushing for higher rates. The Bank’s chief, Andrew Bailey, also suggested that rate cuts could be on the horizon for this year. All eyes are now on the upcoming British GDP numbers set to be released on Friday, which could give more insight into the Bank’s future decisions.

GBPUSD Falls After US Inflation Report Shocks