GBP/USD rises to 1.3450 after UK inflation cools
The pound sterling rallied despite UK inflation cooling faster than expected. Headline Consumer Price Index for April slipped to 2.8% YoY.
The Bank of England governor sounded dovish in an afternoon speech, which normally would invite the market to price in more rate cuts and sell the currency. However, the US Dollar slid broadly due to easing Middle East tensions and softer Treasury yields.
The pound’s strength is attributed to the US Dollar’s weakness, rather than any domestic factors. While consumer prices cooled, producer prices ran hot, with input and output cost measures topping forecasts.
This pipeline pressure could become consumer inflation tomorrow, potentially affecting the pound’s value.