GBP/USD Price Forecast: Continues to remain flat ahead of US CPI data

• GBP/USD trades sideways around 1.3500 ahead of the US CPI and the UK Q2 GDP data.
• The US headline and core CPI are expected to arrive lower at 3.4% and 2.5% YoY, respectively.
• Investors expect the UK Q2 GDP growth to have slowed down to 0.4%.

The British Pound (GBP) remains in a limited range at around 1.3500 against the US Dollar (USD) during the European trading session on Wednesday. The GBP/USD pair is expected to remain sideways, with investors awaiting the United States (US) Consumer Price Index (CPI) data for July in the North American session and the United Kingdom (UK) Q2 Gross Domestic Product (GDP) data on Thursday.

Investors expect the US CPI data to have a meaningful impact on Federal Reserve (Fed) interest rate expectations, as comments from Chairman Kevin Warsh in the July policy meeting press conference signaled heightened concerns regarding upside inflation risks.

Analysts at Danske Bank highlight that “today's most important data release will be the US July CPI,” with the bank forecasting “headline inflation at 0.2% MoM SA, 3.4% YoY (prior: -0.4% MoM, 3.5% YoY) and core inflation at 0.2% MoM SA, 2.5% YoY (prior: 0.0% MoM, 2.6% YoY).” The projections point to a modest month-on-month rebound in both headline and core price pressures, alongside slightly lower annual rates compared with June.

On Thursday, the UK Q2 GDP data is expected to arrive lower at 0.4% from 0.6% in the first quarter this year. On an annualized basis, the GDP growth is seen at 1.1%, faster than the previous reading of 0.9%.

GBP/USD Technical Analysis

GBP/USD trades at around 1.3500 above the 20-day exponential moving average (EMA) at 1.3437 and has broken through the downward resistance trend line, now offering support around 1.3465, which together suggests a constructive bullish bias while price consolidates near recent highs.

The Relative Strength Index (14) at about 60 keeps upward momentum intact without yet entering overbought territory, hinting that buyers still control the near-term direction as long as spot remains anchored above these supports.

On the downside, initial support is seen at the former trend-line break level near 1.3465, followed by the 20-day EMA at 1.3437, where a deeper pullback would be expected to attract dip-buying interest. Below the 20-day EMA, the pair would be exposed to the July 28 low at 1.3273. Looking up, the pair could advance towards 1.3600 if it rebounds above the August 10 high at 1.3530.

(The technical analysis of this story was written with the help of an AI tool. Know more.)