GBP/USD Drops After CPI and Fed Hold: Will $1.3476 Hold Before BoE Rate Call?

On Wednesday, GBP/USD briefly climbed toward $1.3460 after the UK’s May inflation data showed signs of easing.

Written by: Arslan Butt • Thursday, June 19, 2025 • 1 min read

• Last updated: Thursday, June 19, 2025

Quick overview

GBP/USD briefly rose to $1.3460 after UK inflation data showed easing, with headline CPI at 3.4% and core CPI at 3.5%.
Despite initial gains, the pound's strength faded as the US dollar regained momentum ahead of the Bank of England's policy decision.
The Federal Reserve maintained its benchmark rate at 4.50%, emphasizing a cautious approach to future rate cuts amid geopolitical tensions.
Technically, GBP/USD is under bearish pressure, trading below key support levels and lacking bullish reversal signals.

On Wednesday, GBP/USD briefly climbed toward $1.3460 after the UK’s May inflation data showed signs of easing. Headline CPI slowed to 3.4%, while core CPI dropped to 3.5%—both in line with expectations. Monthly inflation also decelerated sharply to 0.2%, down from April’s 1.2%.

Though these numbers support the Bank of England’s case for easing later this year, traders weren’t convinced. The initial reaction boosted the pound, but gains faded quickly as the US dollar regained strength. With the BoE’s policy decision due later today, GBP/USD remains in focus, with rate vote splits and forward guidance likely to shape short-term price action.

Fed Holds Rates, Dollar Firms on Caution and Geopolitical Risks

The Federal Reserve left its benchmark rate unchanged at 4.50%, as expected. Chair Jerome Powell reiterated the data-dependent stance, stating the Fed needs “greater confidence” that inflation is sustainably moving toward 2% before cutting rates.

Markets still expect a September rate cut, with about an 80% probability priced in. However, risk-off sentiment and rising geopolitical tension have kept the US dollar supported. The DXY is now trading above 99.00, applying pressure on both GBP/USD and EUR/USD.

GBP/USD Price Chart - Source: Tradingview — GBP/USD Price Chart – Source: Tradingview

GBP/USD Technical Analysis: Bearish Momentum Builds

Technically, GBP/USD is struggling after breaking below its ascending trendline. The pair now trades beneath the 50-EMA ($1.35083) and has failed to reclaim broken horizontal support at $1.3421. No bullish reversal signals have formed.

Resistance Zone: $1.34760–$1.35000
Support Levels: $1.33841 and $1.33407
MACD: Remains negative, suggesting continued downside bias

If the BoE strikes a cautious tone or signals delayed tightening, GBP/USD could extend its decline. A short position below $1.3476, targeting $1.3340, remains technically valid.

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ABOUT THE AUTHOR See More

Arslan Butt

Lead Markets Analyst – Multi-Asset (FX, Commodities, Crypto)

Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics. His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker. His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.