The British Pound remained stable during the North American session, with GBP/USD trading at 1.3377, as UK inflation data for June showed a dip from 2.8% to 2.6% year-over-year. The core Consumer Price Index (CPI) held steady at 2.6% year-over-year for the same period, easing pressure on the Bank of England to address high prices. Despite the softer inflation data, traders are still pricing in an 82% chance of a rate hike by the Bank of England at its November 5 meeting, according to Prime Terminal data. The new Prime Minister, Andy Burnham, welcomed the inflation relief, while Finance Minister John Healey described the data as positive but emphasized the need for further government action to support households [1].
Meanwhile, geopolitical tensions in the Middle East, specifically ongoing attacks between the US and Iran, have triggered a surge in oil prices. West Texas Intermediate (WTI), the US crude benchmark, rose by over 2.5% to $86.70, with petrol prices in July up nearly 24%, though still below the $90 level seen in June. US President Donald Trump issued a warning to Iran regarding potential attacks on ships, threatening retaliation against infrastructure targets near Tehran [1].
In the US, the economic calendar was light, but traders are anticipating the release of Initial Jobless Claims for the week ending July 18, as well as S&P Flash PMIs and the Federal Reserve's monetary policy decision next week. Money markets have priced in a 65% chance that the Fed will keep rates unchanged at the July 29 meeting, a decrease from 78% the previous day, according to Prime Terminal data [1].
From a technical perspective, GBP/USD is trading at 1.3375 with a mildly bearish near-term bias, remaining below key Simple Moving Averages (50, 100, and 200-day SMAs) clustered between 1.3464 and 1.3472, and a descending resistance trend line at 1.3476. The Relative Strength Index (RSI 14) at 50 indicates a neutral, consolidative tone. The FXS Fed Sentiment Index at 128.64 suggests a firm policy backdrop that may continue to cap Sterling rallies. Initial resistance is seen at the 50-day SMA (1.3464), with further resistance at the 100-day (1.3468) and 200-day (1.3472) SMAs, and the trendline at 1.3476. A break above this zone would be needed to ease bearish pressure, while a pullback could retest recent lows [1].
CONCLUSION
The British Pound's stability reflects a balance between easing UK inflation and heightened geopolitical risks driving oil prices higher. While the inflation data offers some relief to policymakers, market participants remain cautious, with technical indicators suggesting a consolidative outlook for GBP/USD. The upcoming US economic data and central bank decisions are likely to influence market direction in the near term.