British Pound climbs as soft US inflation data hurt Fed hawkish bets

The British Pound (GBP) experienced a slight increase against the US Dollar (USD) on Thursday due to lower-than-expected US inflation data. The GBP/USD pair reached 1.3503, marking a 0.06% rise. The US Dollar Index (DXY) fell by 0.14% to 99.83. The US Producer Price Index (PPI) for July decreased from 5.5% to 4.7% year-over-year, falling short of forecasts.

Core PPI, which excludes volatile items, also fell from 4.7% to 4.2% year-over-year. Meanwhile, Initial Jobless Claims in the US increased from 200K to 209K, exceeding estimates of 202K. This data, combined with July’s mild inflation readings in both consumer and producer sectors, may prevent a Federal Reserve (Fed) rate hike during the September 16 meeting.

This, along with the positive outlook on the labor market, could keep the Fed from raising interest rates at the aforementioned meeting. Despite the Fed's potential cautious stance, CFO Beth Hammack suggested that the US central bank should raise rates to curb growth and inflation. Richmond Fed President Thomas Barkin remained undecided on the need for a rate increase, stating that inflationary pressures may be due to shocks that should pass.

The UK's economy grew by 0.4% in Q2 2026, in line with expectations. Upcoming economic releases from the US and the UK will include the University of Michigan Consumer Sentiment and various inflation data, which could influence bond markets and the Bank of England (BoE) monetary policy. Current technical analysis indicates a bullish near-term bias for GBP/USD, with immediate resistance at the descending trend line break near 1.3510 and higher support at 1.3575.

The Relative Strength Index (14) at 59.3 remains positive, while the FXS Fed Sentiment Index suggests a cooling policy anxiety backdrop.