The GBP/USD exchange rate has appreciated following a decline in UK inflation, which has strengthened market expectations for a near-term interest rate reduction by the Bank of England (BoE). March’s UK inflation rate registered at 2.6% year-over-year, falling short of both consensus forecasts and the BoE’s internal projections. This development has reinforced market sentiment, with an estimated 86% probability of a 25 basis point rate cut at the BoE’s May meeting. Concurrently, the US Dollar Index (DXY) experienced a decline, despite robust US retail sales data being partially offset by weaker control group figures. The GBP/USD pair is currently trading around 1.3248, having reached a daily high of 1.3291. Future GBP/USD performance will likely be influenced by upcoming commentary from Federal Reserve Chairman Jerome Powell.
