Pound Sterling reverses intraday gains as US PPI and UK political risk weighs

• Over 80 Labour MPs pushed for PM Starmer's resignation after poor local elections, raising UK fiscal spending fears.
• US PPI rose 1.4% MoM in April against a 0.5% consensus, weighing on risk appetite and lifting the US Dollar.
• Thursday's first-quarter UK GDP is the next major catalyst for Pound Sterling.

GBP/USD ended Wednesday little changed on a net basis, though the session included a sharp intraday swing of around 65 pips. The pair climbed through London hours before an aggressive reversal into the US session pressed it to the day's low; a recovery through the New York afternoon left price near the opening level, extending the pullback from last week's multi-week highs.

Political uncertainty in the United Kingdom continued to pressure Pound Sterling, with more than 80 Labour members of parliament having called for Prime Minister Keir Starmer to step down following the party's poor local election results. Investors are concerned that a leadership change could lead to looser fiscal policy to regain voter support, adding to the United Kingdom's already elevated borrowing pressures; the International Monetary Fund (IMF) recently cut its UK growth forecast for 2026 from 1.3% to 0.8%. Thursday's first-quarter gross domestic product (GDP) release is the key upcoming event for Pound Sterling, with the data likely to sharpen market views on the fiscal and monetary policy outlook into the second half of the year.

US Producer Price Index (PPI) data for April delivered a sharp beat, with the headline MoM print at 1.4% against a 0.5% consensus and the YoY rate jumping to 6.0%, well above the 4.9% forecast; core PPI excluding food and energy rose 1.0% MoM against a 0.3% estimate. The hot figures reinforced expectations that US inflation, already elevated by energy price pass-through from the Iran conflict, is broadening into wider channels, lending support to the US Dollar and compressing risk appetite. US retail sales and initial jobless claims on Thursday will provide the next read on US economic momentum.

GBP/USD 15-minute chart

Technical Analysis

In the fifteen-minute chart, GBP/USD trades at 1.3528, holding below the daily open at 1.3538, which keeps the near-term tone mildly bearish as intraday rallies struggle to reclaim that reference point. The Stochastic RSI at 72.24 sits in overbought territory, hinting that upside momentum is stretching and could leave the pair vulnerable to renewed selling if buyers fail to drive a sustained move back over the daily open.

On the topside, initial resistance is located at the day’s open around 1.3538, and a clear break above this level would be needed to ease immediate downside pressure and allow a deeper recovery. With no nearby structural supports from the provided data, any pullback from current levels would likely leave traders watching for fresh price action levels to emerge below 1.3528 to gauge where demand might reappear.

In the four-hour chart, GBP/USD trades at 1.3528. The pair holds a mildly bullish near-term bias as it trades above the 200-period exponential moving average (EMA) at 1.3504, suggesting underlying demand persists despite the recent pullback from higher highs. The Stochastic RSI has dropped toward the mid-teens, hinting that downside momentum could be fading as price consolidates above this key dynamic support.

On the downside, initial support is aligned with the 200-period EMA at 1.3504, with a break below this zone likely exposing the recent lows near the mid-1.35 area. With no nearby technical resistance levels provided by moving averages or Fibonacci retracements, any recovery is likely to be shaped by how firmly buyers can defend the 1.3500–1.3505 band, while a sustained close back under the EMA would undermine the current constructive tone on the four-hour chart.

(The technical analysis of this story was written with the help of an AI tool.)