The British pound staged a choppy relief rally on Thursday, with GBP/USD bouncing back into the 1.3500 range as markets brace for the release of the latest U.S. Personal Consumption Expenditures (PCE) inflation data, due Friday.
Investor sentiment remains clouded by trade policy uncertainty after U.S. President Donald Trump’s “Worldwide Retaliatory Tariff Orders” faced a major legal setback. U.S. trade court judges ruled against the measures, although the tariffs remain in place pending an appeal. Markets continue to navigate an opaque policy landscape, with clarity from the Trump administration still elusive.
Friday’s PCE inflation report for April is expected to cap the week’s economic data releases. Median forecasts anticipate a slight cooling in year-over-year inflation, easing to 2.5% from 2.6%. However, on a monthly basis, inflation is projected to rise by 0.1%, reversing March’s flat reading. Economists note that while tariff-driven price increases are starting to trickle into the data, the full impact of the latest import levies is unlikely to be reflected until future reports, as many of the duties were implemented late in the April reference period.
GBP/USD Outlook:
The pound snapped a two-day losing streak Thursday, retesting the 1.3500 level amid ongoing bullish momentum. The currency pair has surged approximately 12.3% from January’s lows near 1.2100, positioning it near multi-year highs.
Technically, any pullback risks testing support at a rising trendline around 1.3400. Still, momentum remains with the bulls, as GBP/USD continues to trade comfortably above the 50-day Exponential Moving Average (EMA), currently near 1.3220.
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