GBP/USD Price Forecast: Pound Subdued following UK CPI and US PPI

July 16, 2025 - Written by Frank Davies

STORY LINK GBP/USD Price Forecast: Pound Subdued following UK CPI and US PPI

The Pound-to-Dollar exchange rate was trapped in a narrow range on Wednesday as the UK released its latest inflation data and the US released its latest Producer Price Index (PPI).

At the time of writing, GBP/USD was trading at approximately $1.3410, virtually unchanged from the start of Wednesday’s session.

The Pound (GBP) lacked clear direction against almost all of its peers on Wednesday and failed to capitalise on a stronger-than-expected UK consumer price index (CPI).

June’s CPI data revealed that both headline and core inflation picked up, rising to 3.6% and 3.7% respectively, overshooting forecasts.

However, the data did little to shift market sentiment, with traders hesitant to adjust their Bank of England (BoE) interest rate expectations ahead of more influential UK economic indicators due later in the week.

As a result, Sterling traded without momentum, hovering in a narrow range throughout the European session.

The US Dollar (USD) faced headwinds on Wednesday after the latest producer price index figures came in below expectations.


Data showed that US producer inflation cooled to 2.3% in June, down from 2.7% and missing forecasts of a more modest decline to 2.5%.

The weaker-than-forecast reading contrasted with Tuesday’s hotter consumer inflation print and prompted investors to increase their bets on a potential Federal Reserve rate cut in September.

As a result, the ‘Greenback’ lost ground during the European session, with softer inflationary pressures dampening demand for the US Dollar.

Thursday’s GBP/USD exchange rate movement is set to hinge on key data releases from both the UK and the US.

Starting with the UK, May’s labour market report will be in focus. While the unemployment rate is expected to hold steady, markets are expecting a slowdown in wage growth.

Average earnings excluding bonuses are forecast to slip from 5.2% to 4.9%. If confirmed, the softening in pay pressures could weigh on the Pound by reinforcing speculation that the Bank of England (BoE) may begin cutting interest rates in the near future.

Across the Atlantic, attention will turn to the US’s latest retail sales figures.


After a sharp -0.9% contraction in May, sales are expected to rebound slightly in June with a 0.1% uptick.

A stronger print could boost demand for the US Dollar, as it would suggest resilient consumer spending.

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TAGS: Pound Dollar Forecasts