GBP/USD firmed modestly following above-forecast CPI figures, which prompted a slight hawkish repricing in the rates market, but cable must recapture 1.25 to alleviate downside pressure.

The Bank of England will have access to two additional CPI reports by the time of the June meeting.
This may affect the relative importance of the April figures, which will be impacted by the base effects.
Thus, June remains a live meeting.

That said, the data will not provide policymakers with more confidence that inflation is sustainably heading to target.
As such, upcoming speeches from several BoE officials, including, Andrew Bailey, Jonathan Haskel, Catherine Mann and Dave Ramsden will be closely watched.

For now, GBP/USD shorts remain in control with the pair holding below the 1.25 handle.
Since breaking below, 1.25 has put a lid on upside, which has somewhat emboldened shorts.

However, with rate differentials beginning to move in favor of sterling, downside pressures may soon abate, unless of course there is a further escalation in geopolitical tensions.

What’s more, the dollar’s inability to rally on hawkish comments from Fed Chair Jerome Powell does suggest that upside in the greenback is becoming exhausted.

With this in mind, a daily close above 1.25 would go some way in alleviating downside risks.

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