GBP/USD rallied to reclaim the 1.3500 handle as US PCE inflation data looms.
Tariff turmoil is set to continue weighing on market sentiment after Thursday’s appeals circus.
US PCE inflation data set to release on Friday, investors growing nervous of tariff impacts.
GBP/USD made a choppy relief rally on Thursday, jumping back into the 1.3500 handle as markets gear up for the latest batch of United States (US) Personal Consumption Expenditure Price Index (PCE) inflation figures due on Friday.
US President Donald Trump’s “Worldwide Retaliatory Tariff Orders” faced its first significant legal challenge after being ruled against by US trade court judges. The tariffs have been allowed to stand for the time being as the Trump administration appeals the decision. However, investors have a long, grinding road ahead as they continue to await some semblance of policy clarity from the Trump administration.
US PCE inflation from April is slated for Friday, and stands as the week’s final key data release. Median market forecasts expect annualized figures to continue declining, but the front end of the curve is expected to begin rising as immediate price impacts of Trump tariffs begin to break through into headline datasets. April’s PCE inflation index is expected to ease to 2.5% YoY from 2.6%, while the MoM figure is forecast to rise back to 0.1% from March’s flat print of 0.0%. The brunt of tariff impacts will take some time to become fully realized in inflation metrics, and the majority of imposed import taxes didn’t come into effect until the tail end of the PCE reference period.
GBP/USD price forecast
GBP/USD snapped a two-day losing streak to retest the 1.3500 region on Thursday. Cable remains buoyed near multi-year highs following a stellar 12.3% run bottom-to-top from January’s lows near 1.2100.
A technical pullback runs the risk of clipping a rising trendline near 1.3400, and the odds remain tilted in favor of bidders. GBP/USD continues to trade well north of the 50-day Exponential Moving Average (EMA) near 1.3220.
GBP/USD daily chart
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