Will GBP/USD bounce if the UK surprises with higher CPI?

UK CPI figures for August due shortly, although traders are still digesting the shock US print from yesterday.

While the surprise to the upside inspired a sharp rally for the US Dollar, the market is already looking for UK inflation to continue higher, and with the BOE anticipating CPI as high 13% in October, there is also an expectation for a more aggressive 75bps rate hike next week. However, this has failed to prevent GBP/USD form trending lower, with the central bank themselves forecasting a recession beginning in Q4.

Will a strong inflation reading from the UK help GBP pare yesterday’s losses against the greenback, or is the pair on track to continue pushing lower?

Check out this article for a deeper insight into GBP/USD and how the market could react:

IMO there will be a short time reaction, however sterling is in a downward trend, so expect that would continue.

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That’s an interesting point, and it currently seems like the CPI data is also supporting the downtrend, with the headline print softer-than-expected.

All trading carries risk, but after fairly underwhelming UK economic data earlier in the week as well, the pair could once again look to retest pandemic-era support.