-1% for Pound Sterling vs Dollar as UK inflation undershoots projections

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Pound Sterling vs Dollar slides 1.00% today

Highlights

UK inflation remained at 2.8% in May, falling short of expectations and reducing pressure for near-term Bank of England rate hikes.
Lower-than-expected inflation data has caused investors to reconsider the outlook for Pound Sterling, contributing to softer demand.
GBP/USD faces pronounced bearish momentum, trades below key moving averages, with a high probability of further downside within the 1.3226–1.3358 range.

Bank of England caution rises as inflation underwhelms projections

UK inflation held steady at 2.8% in May, coming in below market forecasts and indicating less immediate pressure for the Bank of England to tighten monetary policy. This suggests a more cautious approach from the central bank, which could lower near-term demand for Pound Sterling as investors reassess potential rate moves. Weaker inflation data thus played a key role in shaping sentiment around the currency pair alongside broader rate expectations.

Technical signals reinforce seller control amid oversold indicators

GBP/USD is trading below the MA-20, MA-50, and MA-200 moving averages. The Ichimoku Kijun level at 1.3349 presents immediate resistance. Momentum indicators such as MACD and ADX confirm strong downside pressure. RSI, Stoch RSI, and CCI are all in oversold territory, while BBP and AO readings also highlight persistent dominance by sellers.

Rangebound trade expected as downside risks outweigh rebound odds

For the coming sessions, GBP/USD is expected to fluctuate within a typical volatility band of 1.3226 to 1.3358. The probability of an upward move remains low, while downside risks are pronounced. The baseline scenario anticipates consolidation within this range, with a bullish setup only if resistance at 1.3349 is broken. Further weakness could develop if the lower end of the range is breached.

Anton Kharitonov, analyst at Traders Union, sees GBP/USD stuck in a bearish channel with sellers dominating after softer UK inflation data. He believes weak fundamentals and technicals both pressure the pair, with little chance of sustained upside unless key resistance is cleared. Downside risks persist as all momentum signals remain negative. "Until GBP/USD reclaims 1.3349, I expect further softness and would remain defensive on the pound," Kharitonov says.

Earlier, analysts noted that sterling's performance remained sensitive to both evolving UK political risks and market expectations around Bank of England policy. The latest moderation in inflation reinforces the cautious outlook for sterling, with traders now closely watching price action around the 1.3349 resistance for signs of a potential shift in trend.

Source of Data: GBP Price Analysis by TU

The analysis is based on a proprietary model combining technical, on-chain, and expert data. Not investment advice. See methodology

The information is based on forecasts and does not constitute investment advice or a guarantee of future results. Market conditions may change. See our Disclaimer and Editorial Integrity for details.