- Inflation in the UK rose by 2.3%, above estimates of a rise of 2.2%.
- The Bank of England is likely to take a less aggressive approach to cutting interest rates.
- The U.S. dollar remained steady after Tuesday’s gains on safe-haven inflows.
The GBP/USD forecast shows better-than-expected UK inflation, which briefly boosted the pound. Meanwhile, the dollar remained steady after recovering in the previous session on fears of an escalation in the Russia-Ukraine war.
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Data on Wednesday showed UK inflation rose 2.3%, above estimates of a 2.2% rise. Moreover, it was higher than the previous month when prices rose by 1.7%. On the other hand, services inflation increased by 5.0%, reducing expectations for a rate cut by the Bank of England. As a result, the pound soared.
UK markets have fewer rate cuts than other major economies in 2025. The new government recently read a budget that is likely to increase inflation and economic growth. Therefore, the Bank of England is likely to take a less aggressive approach to interest rate cuts.
Meanwhile, the U.S. dollar remained steady after Tuesday’s gains on safe-haven inflows. The nuclear fear of Russia caused the fear of an escalation of the war in Ukraine. As a result, traders sought safety in currencies such as the dollar and yen. Meanwhile, risk currencies such as the pound tumbled.
The risk of an escalation in Ukraine and Trump’s policy changes are likely to keep the dollar on firm ground. Trump’s policy proposals have changed the outlook for the US economy and inflation. Experts expect strong growth, an increase in consumer prices and a complication of the Fed’s rate-cutting cycle.
Furthermore, incoming data will shape the outlook for future rate cuts. Currently, markets are pricing in a 60% chance of a Fed rate cut in December.
GBP/USD key events today
GBP/USD Technical Forecast: Bulls show no strength above 30-SMA


From the technical side, GBP/USD the price is trading slightly above the 30-SMA, which is a sign that the bulls have triggered a downtrend. However, the price made a weak breakout above the SMA and the bears seem poised to take control. At the same time, the RSI is trading below 50, indicating strong bearish momentum.
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The price broke above the SMA after the RSI made a bullish divergence. However, if the bulls cannot sustain the uptrend, the price is likely to break below the SMA to retest the 1.2600 support level.
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