FX.co ★ HiDe_N_SeEk | GBP/USD

GBPUSD As investors process the most recent inflation data from the United Kingdom (UK) and evaluate the prospects for monetary policy on both sides of the Atlantic, GBP/USD is trading at 1.3515 on Wednesday, up a slight 0.06% at the time of writing. The UK Consumer Price Index (CPI) increased from 3% in February to 3.3% YoY in March, reflecting market expectations, according to data previously issued by the Office for National Statistics (ONS). Inflation rose by 0.7% on a monthly basis, above projections of 0.6% and representing the biggest increase in almost a year. Underlying price pressures, however, appeared to be lessening. Excluding food, energy, alcohol, and tobacco, core inflation increased by 3.1% year over year, which was just less than the 3.2% predicted. Although overall prices have increased due to rising energy costs associated with Middle East tensions, the Bank of England (BoE) may be able to maintain its benchmark interest rate at 3.75% at its next meeting on April 30 due to the slowing of core inflation. In addition to inflation, producer and retail price statistics also showed positive surprises. While retail prices rose by 0.8% MoM and 4.1% over the previous year, both exceeding market expectations, the Input Producer Prices Index grew by 4.4% MoM in March and 5.4% annually. Strong domestic economic data is supporting the US dollar (USD) at the same time. The US Census Bureau reported on Tuesday that retail sales increased by 1.7% month over month in March, which was far higher than the 1.4% forecast and faster than the corrected 0.7% gain in February. Retail sales increased by 4% annually, which is consistent with the prior reading. Investors should exercise caution in the upcoming days as a number of important UK indicators are set to be released. The March retail sales data is scheduled for Friday, while the preliminary S&P Global Purchasing Managers Index (PMI) figures for April are due on Thursday. Both of these events could cause further volatility for the pound sterling (GBP).