GBP/USD falls back as tariff cuts bolster market sentiment

• GBP/USD declined a full 1% on Monday after US tariff walkback boosted Greenback.
• Key UK and US data looms ahead on Tuesday.
• UK labor data will be followed up by a key US CPI inflation print.

GBP/USD fell on Monday, tumbling a little over one percent and pushing the pair back down below the 1.3200 handle after a broad-based recovery in Greenback bidding. The United States (US) and China mutually agreed to temporarily suspend steep triple-digit tariffs during preliminary trade talks over the weekend, and markets have some room to breathe before the US's bizarre "reciprocal" tariff schedule is set to come back into effect in 90 days.

Forex Today: All the attention shifts to US Inflation data

Traders will be hitting the ground running on Tuesday: a fresh batch of employment figures is due from the UK, followed by a key batch of US Consumer Price Index (CPI) inflation data due during the upcoming American market session. UK Claimant Count Change is expected to have ticked higher in April, forecast to rise to 22.3K versus March's 18.7K print. The ILO Unemployment Rate is also expected to tick higher to 4.5% for the three months ending in March, and Average Hourly Earnings are expected to decline slightly.

US inflation data to draw plenty of eyes

US CPI inflation for April will be a hotly-watched data print on Tuesday. Headline CPI inflation in April is expected to jump to 0.3% MoM from the previous -0.1% print, and core CPI inflation is expected to rise to a matching 0.3% from 0.1%. However, core and headline inflation are expected to hold steady on an annualized basis.

GBP/USD price forecast

Despite a near-term bearish turnaround, GBP/USD holds firmly onto the bullish side. The pair is still trading on the high end of the 50-day Exponential Moving Average (EMA) near 1.3085. However, price action has slipped notably from recent highs posted north of the 1.3400 handle.

GBP/USD daily chart