Photo by Colin Watts on Unsplash 

The British Pound (GBP) traded with a cautious tone on Tuesday as investors digested mixed UK labour market data. While unemployment held steady, slower wage growth dampened confidence and revived expectations that the Bank of England could move toward interest rate cuts later in the year. This tempered Sterling enthusiasm, particularly against European peers.

At the same time, broader market dynamics helped limit downside pressure on the Pound. Renewed geopolitical tensions and trade-related uncertainty weighed on global risk sentiment, pressuring US equities and weakening the US dollar. That USD softness provided an important counterbalance, allowing Sterling to remain supported despite domestic data concerns.

Coming up on Wednesday: UK CPI inflation

Looking ahead, investor attention is shifting to UK Consumer Price Index (CPI) inflation data due Wednesday, which is expected to play a decisive role in shaping near-term expectations for the Bank of England. Any surprise in inflation, either higher or lower than forecast, could quickly recalibrate the timing of rate cuts and drive renewed volatility in Sterling pairs.

GBP/USD price forecast

GBP/USD has shown a modest upward bias this week, largely driven by broad-based US dollar weakness rather than strong UK fundamentals. The pair has rebounded from recent lows as geopolitical risk and tariff concerns undermined confidence in the greenback, allowing Sterling to advance even as UK macro data disappointed.

However, gains have remained measured. Softer UK labour figures and lingering uncertainty around the Bank of England’s policy path have capped upside momentum, keeping GBP/USD trading within a relatively contained range. Markets remain highly sensitive to incoming data, with Wednesday’s inflation release likely to determine whether this week’s recovery can extend or stall near current levels.

GBP/USD daily chart

(Click on image to enlarge)

More By This Author:

Dow Jones Industrial Average Gets Knocked Lower As Investors Chew On Greenland Threats
Dow Jones Industrial Average Softens On Final Trading Day Of 2025
USD/JPY Treads Water Near 156.00 As Yen Traders Grapple With Multiple Headwinds