GBP/USD softens after UK data miss, US CPI still in the barrel

• GBP/USD knocked lower after UK wages and labor data widely missed forecasts.
• US CPI inflation data is on deck, poised to be a high-impact print.
• Mid-tier UK trade data and US consumer sentiment figures to follow later in the week.

GBP/USD took a step lower on Tuesday, falling under the weight of a wide miss in UK wages and unemployment figures. US Consumer Price Index (CPI) inflation data is in the barrel for Wednesday, and Cable traders are set to grapple with mid-tier UK trade data later in the week.

Delegates from the Trump administration are finalizing trade talks with Chinese officials in London. Negotiations are nearing completion, with loose ends expected to be resolved after Tuesday's market close. Major concessions from either side are still unannounced or unachieved, leading to investor apprehension as trade tensions persist at the policy level.

The first CPI inflation data, reflecting the initial effects of the Trump administration's global "reciprocal" tariffs, is anticipated on Wednesday, with forecasts predicting a rise in headline and core CPI. May's annualized headline CPI inflation is projected to increase to 2.5% YoY from 2.3%, while core CPI is expected to rise to 2.9% from 2.8%.

Producer Price Index (PPI) inflation will be released on Thursday, likely holding steady at 3.1% YoY. The University of Michigan's Consumer Sentiment Index will be published on Friday, with expectations for an increase in consumer sentiment.

GBP/USD price forecast

GBP/USD has retreated from its multi-year peaks, yet Cable bids are still buoyant. The pair remains stable in short-term consolidation near 1.3500 and continues to exhibit a strong bullish tendency, with prices significantly above the 200-day Exponential Moving Average (EMA) located near 1.2960.

GBP/USD daily chart