GBP/USD Price Forecast: Soft US CPI Data Backs Upside Towards 1.3500

• GBP/USD rises to near 1.3403 amid weakness in the US Dollar.

• Traders trim hawkish Fed bets due to lower-than-expected US CPI growth in June.

• Andy Burnham is set to become the new UK Prime Minister.

The British Pound (GBP) is up 0.1% at around 1.3403 against the US Dollar (USD) during the European trading session on Wednesday. The GBP/USD pair gains as the US Dollar comes under selling pressure, with market participants dialing down expectations for Federal Reserve (Fed) interest rate hikes.

In the European trade, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, has recovered its early losses and is marginally down to near 100.87. However, the DXY is still holding Tuesday’s losses.

According to the CME FedWatch tool, the odds of the Fed raising interest rates in the policy meeting this month have eased to 16.6% from 41.7% recorded on Monday.

Traders pare hawkish Fed bets as the United States (US) Consumer Price Index (CPI) report for June showed on Tuesday that both headline and core inflation grew at a slower-than-expected pace.

In the United Kingdom (UK), Andy Burnham is set to replace Prime Minister (PM) Keir Starmer on July 20 and will likely appoint a new Finance Minister (FM). The smooth UK leadership transition is supporting the British Pound.

GBP/USD technical analysis

GBP/USD trades slightly higher at around 1.3400, holding a mildly bullish near‑term bias as it remains above the 20‑period exponential moving average (EMA) at 1.3350. However, the overall trend appears sideways amid the Descending Triangle formation.

The Relative Strength Index (RSI) at 55.93 suggests steady, but not overextended, upside momentum.

On the downside, initial support is seen at the current price area around 1.3401, with the 20‑period EMA at 1.3350 reinforcing a nearby demand zone before the structural floor defined by the rising trend‑line break near 1.3166. On the topside, a sustained move above 1.3520, where the descending resistance trend line break level resides, would be needed to open the door for a more decisive bullish extension beyond the recent range. Above 1.3520, the pair could extend its advance towards 1.3600.