GBP/USD Forecast: Pound Climbs vs Dollar on Soft US Inflation Data

May 13, 2025 - Written by Tim Boyer

STORY LINK GBP/USD Forecast: Pound Climbs vs Dollar on Soft US Inflation Data

The Pound US Dollar exchange rate gained ground on Tuesday as the US released its latest inflation reading.

At the time of writing, GBP/USD was trading at approximately $1.3245, up roughly 0.5% from the start of Tuesday’s session.

The US Dollar (USD) came under pressure on Tuesday following the publication of a softer-than-expected US inflation print.

April’s consumer price index (CPI) showed headline inflation easing to 2.3%, down from 2.4%, marking the lowest rate in more than four years and falling short of forecasts for a steady reading.

The unexpected decline prompted traders to reassess the Federal Reserve’s policy trajectory, dragging the ‘Greenback’ lower.

Adding to the downside, a generally upbeat market mood saw investors shy away from the safe-haven currency, intensifying the USD’s losses.

The Pound (GBP) faced early pressure on Tuesday after disappointing UK labour market figures dented investor confidence.


According to the latest ONS (Office for National Statistics) report, unemployment climbed to 4.5% in March, reaching its highest level since summer 2021, while wage growth (excluding bonuses) cooled more than anticipated, slipping from 5.9% to 5.6%.

The figures fell short of forecasts and raised fresh concerns about the strength of the UK jobs market.

Despite the initial downturn, Sterling found firmer footing later in the session, particularly against safe-haven currencies like the US Dollar.

A risk-on mood helped offset earlier losses, with the Pound’s sensitivity to risk sentiment offering it modest support into the afternoon.

In the absence of fresh economic data from either side of the Atlantic, the spotlight is now on central bank commentary to drive movement in the GBP/USD exchange rate.

Following the Bank of England’s (BoE) hawkish commentary at its most recent policy meeting, further optimistic signals could offer the Pound additional support during Wednesday’s European session.

For the US Dollar, if the Federal Reserve responds to Tuesday’s cooler-than-forecast inflation figures with dovish signals, the US Dollar may come under renewed pressure as the week unfolds.

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TAGS: Pound Dollar Forecasts