Today’s release of the US Consumer Price Index (CPI) report for April is the star of the week for the currency market.
One might ask: what does this data have in store for the GBPUSD pair? Let’s find out.
Traders expect annual readings to accelerate and monthly figures to come in lower:
The headline CPI (year-over-year) is forecast to jump from 3.3% in March to the 3.7%–3.8% range.
The headline CPI (month-over-month) is projected to land between 0.6% and 0.7%, down from last month’s 0.9%.
The core CPI (year-over-year) is expected to edge up to 2.7%, slightly higher than 2.6% recorded in early spring.
Another question that we should take into consideration: why is inflation so stubborn? Actually, the answer lies on the surface: the energy shock. A military conflict between Iran and the United States has disrupted supply chains through the Strait of Hormuz, cementing crude prices above $100 and pushing gasoline costs to levels not seen since 2022. Technical adjustments to rental rates are now putting more pressure on the base reading, potentially adding 0.1%–0.2% this month.
If the US CPI report comes in above market expectations, any lingering hope for a Federal Reserve (Fed) rate cut in 2026 will vanish. Some major financial institutions like Bank of America (BofA) have already moved their outlook for US monetary easing into the second half of 2027.
There is another piece of the puzzle: a change in leadership at the American central bank. This week, the US Senate is expected to appoint Kevin Warsh as the Fed Chair. Jerome Powell’s term ends on May 15. The market views the regulator’s new head policy as dovish, but it doesn’t really matter—soaring inflation would leave him no room to cut rates.
The dollar’s weakness, driven by hopes that prices have peaked, could push GBPUSD above $1.3650, with a target of $1.3730.
The overall recommendation is to buy GBPUSD if US inflation proves to be slowing. Profits should be taken at 1.3730. Stop Loss could be set at 1.3540.
The volume of the open position should be calculated so that the potential loss (protected by a Stop Loss order) does not exceed 1% of your deposit. If your account balance does not allow opening a position of this size, it is better to avoid entering the market on this signal and wait for other trade options that meet low-risk criteria.
This content is for informational purposes only and is not intended to be investing advice.
