GBP/USD: Sterling Grinds Higher to $1.25 as UK Inflation Tops Estimates at 3.2% for March

Analysts expected a cool 3.1% rise in consumer prices. Now the Bank of England will likely take more time assessing future rate cuts.

Key Points:

• Sterling jumps on inflation data.
• Exchange rate floats near $1.25.
• Bank of England waiting for data.
• The GBPUSD pair is looking to reverse its short-term downward trend after the latest UK inflation data came in surprisingly above estimates. Consumer prices for March rose at an annual rate of 3.2%, eclipsing analyst expectations for a 3.1% increase. On the positive side, it was the lowest inflation print since 2021.
• Apparently, traders are not convinced that inflation pressures are fading. The sterling pound advanced a moderate 0.3% on the news, threatening to overtake the $1.25 level against the US dollar. Over the past six weeks, the UK currency has erased about 3.5% of its valuation to the greenback, sliding from $1.29 to current market prices.
• Despite the warm figure, inflation has made steady progress, coming from a 7.3% clip last year. Still, there’s a lot more to be done to get price growth back to the Bank of England’s 2% target. And similarly to the Federal Reserve in the US, the UK central bank will likely wait for more data before lowering interest rates.