The Office for National Statistics will release the UK Consumer Price Index (CPI) report for August on Wednesday at 06:00 GMT, just a day before the Bank of England’s policy meeting. This data is expected to play a crucial role in shaping expectations for the Pound and the central bank’s next move on interest rates.
Forecasts point to headline CPI rising 3.9% year-on-year in August, slightly higher than July’s 3.8% increase and nearly double the BoE’s 2% target. Core CPI, which excludes volatile items, is projected to ease to 3.6% from 3.8%, while service inflation is expected to remain elevated at 4.8%, showing continued price stickiness. On a monthly basis, CPI is anticipated to climb 0.3% after July’s 0.1% gain.
Analysts expect a mixed print, with headline inflation slightly above both market and BoE forecasts, while core aligns with the bank’s projections. Such an outcome could reinforce the view that price pressures remain sticky, limiting the BoE’s scope for aggressive easing.
A stronger-than-expected reading would likely dampen hopes for further rate cuts this year, giving the Pound a boost and potentially driving GBP/USD toward the 1.3700 level. On the other hand, a softer CPI outcome could revive bets on a November cut, pressuring the currency.
From a technical perspective, GBP/USD needs a sustained move above 1.3650 to extend gains toward 1.3700 and possibly 1.3789. Immediate support lies near 1.3550, with deeper downside risks emerging if the pair falls below the 21-day SMA at 1.3506 and the 50- and 100-day SMAs clustered around 1.3470.
