GBP/USD extends rally to fresh six-month highs near 1.3250 ahead of UK CPI data

• GBP/USD reached a fresh six-month high at 1.3256 on Wednesday.

• Markets have largely priced in a 90% probability of a rate cut in May, according to interest rate futures.

• The upcoming US Retail Sales data could offer fresh insight into the impact of tariff concerns on consumer behavior.

The GBP/USD pair continues its winning streak that began on April 8, trading around 1.3250 during Wednesday’s Asian session. Earlier in the day, it touched a fresh six-month high at 1.3256. The pair has maintained strong momentum, boosted by improved global risk sentiment after US President Donald Trump announced exemptions for key technology products from his new “reciprocal” tariffs.

In the UK, labor market data showed on Tuesday that the unemployment rate held steady at 4.4% in February, in line with expectations. Wage growth, however, remained robust, maintaining pressure on the Bank of England (BoE).

The BoE has refrained from easing monetary policy, citing persistent wage strength. Nonetheless, interest rate futures suggest that markets have already priced in a 90% probability of a rate cut in May, with expectations for two additional cuts later this year.

All eyes are now on the UK Consumer Price Index (CPI) data for March, due later on Wednesday. Economists forecast core CPI—which excludes food and energy—to remain stable at 3.5% year-over-year.

Meanwhile, the US Dollar Index (DXY), which measures the US Dollar against a basket of six major currencies, is trading lower near 99.80. Later in the day, the focus will shift to US Retail Sales data for March, which could offer fresh insight into the impact of tariff concerns on consumer behavior.