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• GBP/USD declined on Thursday, driven back by rising Greenback demand.
• US PPI inflation surged higher in July, sparking a flight into US Dollar safety.
• Markets trimmed their bets for multiple Fed rate cuts through the end of the year.

GBP/USD recoiled from rising US inflation metrics on Thursday, sending the US Dollar (USD) broadly higher and snapping a two-day winning streak in the Cable-Dollar pairing. GBP/USD saw its largest single-day decline in over two weeks, pushing the pair back toward 1.3500 after flubbing a technical push toward 1.3600.

Despite getting trimmed lower by around one-third of one percent, GBP/USD is still holding firmly onto the bullish side. Cable is still trading well above the 200-day Exponential Moving Average (EMA) near 1.3170, and immediate technical support is priced in at the 50-day EMA near 1.3440. Momentum has been a one-sided affair in favor of bidders, although the lower-highs patten baked into daily candlesticks is under threat of breaking down.

US inflation heats up, crimps Fed rate cut hopes
 

UK GDP figures broadly came in above expectations early Thursday, with the UK economy growing 0.3% QoQ versus the expected slowdown to 0.1%. Industrial Production also rebounded more than expected, recovering 0.7% MoM in June, however, May’s figure was revised lower to -1.3%.

On the US side, Producer Price Index (PPI) inflation rocketed back to multi-month highs of 3.3%, while core PPI inflation soared to 3.7% YoY. Rising inflation pressures knocked back expectations for three rate cuts from the Federal Reserve (Fed) by the year’s end, but rate markets are still pricing in at least two rate cuts with over 90% confidence that the Fed will trim interest rates by 25 bps on September 17.

US Retail Sales and the University of Michigan’s (UoM) Consumer Sentiment Index will be the main data drivers on Friday. US President Donald Trump’s repeatedly announced meeting with Russian President Vladimir Putin will also take place on Friday, giving traders plenty of headline-watching time to round out the trading week. Despite his repeated claims and insistence on being a world-class negotiator and dealmaker, President Trump has faced repeated struggles in securing the concessions he wants from other countries during both of his presidential terms.

GBP/USD daily chart
 

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