As tariff-related volatility eases, GBP/USD traders are focusing back to economic data and central banks, with below-forecast monthly U.S. core CPI data on Tuesday giving a slight edge to sterling bulls against a backdrop otherwise characterized by stability in Fed and BoE expectations.

LSEG’s IRPR sees both central banks holding steady in the coming months. STIR futures are pricing a 75% chance of a BoE cut in August and a likely Fed cut in September. By December, markets expect Fed rates at 3.93% and BoE at 3.78%. Sterling rose from a low of 1.3169 in Asia to 1.3247 in early NorAm, gaining momentum during European trading after BoE Chief Economist Huw Pill expressed concern that UK inflation could be more persistent than anticipated, which suggested rates may need to stay high for longer. Pill had opposed last week’s BoE rate cut.

Given the relatively symmetrical paths that markets foresee the BoE and Fed taking, and barring a renewed flare-up in U.S. trade tensions, sterling is likely to remain anchored near current levels, bounded by 1.3079, the 50% Fib of 1.3445-1.2712, and 1.3445, which is the 2025 high put in on April 28.
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(Paul Spirgel is a Reuters market analyst. The views expressed are his own)