GBP/USD Outlook: Pound to Dollar Rate Weakens Following US Inflation Data

February 13, 2025 - Written by Frank Davies

STORY LINK GBP/USD Outlook: Pound to Dollar Rate Weakens Following US Inflation Data

The Pound US Dollar exchange rate slumped on Wednesday following the release of the US’s latest inflation data.

At the time of writing, GBP/USD was trading at approximately $1.24832, up roughly 0.26% from the start of Thursday’s session.

On Wednesday, the US Dollar (USD) surged against most of its major counterparts after releasing the latest US inflation figures.

The core inflation rate for January increased from 3.2% to 3.3%, instead of dropping to 3.1% as expected.

Meanwhile, the headline inflation rate climbed from 2.9% to 3%, contrary to forecasts that it would stay at 2.9%.

This unexpected rise in inflation led to a significant boost for the 'Greenback,' as it weakened the market's expectations for interest rate cuts by the Federal Reserve.

On Wednesday, the Pound (GBP) saw little movement against its major counterparts as a lack of economic data releases left GBP exchange rates without a clear direction.

Investors appeared hesitant to place any aggressive bets on Sterling, possibly waiting to make significant moves ahead of important data scheduled for the next day.

Thursday is set to see the release of the UK’s preliminary GDP figures for the fourth quarter of 2024 which likely contributed to the Pound’s quiet performance on Wednesday.

Looking ahead, the main driver of movement for the Pound US Dollar exchange rate on Thursday will likely be economic data releases from
both the UK and the US.

The UK revealed its latest GDP figures, which saw GBP to EUR and GBP to USD exchange rates rise.

On the US side, the latest Producer Price Index (PPI) and initial jobless claims survey are scheduled for release.

Any deviation from market expectations in these indicators could introduce new challenges for the US Dollar as the week progresses.

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TAGS: Pound Dollar Forecasts