The United Kingdom (UK) Consumer Price Index (CPI) data for January is scheduled to be published today at 07:00 GMT.
The Office for National Statistics (ONS) is expected to show that the headline inflation cooled down to 3% Year-on-Year (YoY) from 3.4% in December. In the policy meeting earlier this month, the BoE stated that price pressures are expected to ease to around “3% in Q1 2026, and closer to 2% in Q2″.
The core CPI – which excludes the volatile components of food, energy, alcohol, and tobacco – is estimated to have grown at a moderate pace of 3.1% against the previous reading of 3.2%. Month-on-month (MoM) headline inflation is expected to have declined by 0.5% after growing 0.4% in December.
Investors will pay close attention to the UK inflation data to get fresh cues on the Bank of England’s (BoE) monetary policy outlook. Meanwhile, dovish BoE expectations have accelerated following the release of the UK labor market data for three months ending in December on Tuesday, which showed a higher jobless rate and moderate wage growth.
How could UK CPI data affect the GBP/USD?
GBP/USD trades slightly lower at around 1.3556 as of writing. The 20-period Exponential Moving Average (EMA) trends lower at 1.3593 and continues to cap rebounds. Price holds beneath this gauge, maintaining a short-term bearish bias.
The 14-day Relative Strength Index (RSI) at 39 (below 50) reflects subdued momentum and favors sellers.
The overall outlook of the price is bearish as it holds the breakdown of the Symmetrical Triangle formation, also known as the Volatility Contraction Pattern (VCP). Generally, a breakdown of the VCP results in wider ticks and heavy volume on the downside. Looking down, Cable could extend its decline towards the round-level figure of 1.3400 if it breaks below Tuesday’s low of 1.3500.
(The technical analysis of this story was written with the help of an AI tool.)
Economic Indicator
Consumer Price Index (YoY)
The United Kingdom (UK) Consumer Price Index (CPI), released by the Office for National Statistics on a monthly basis, is a measure of consumer price inflation – the rate at which the prices of goods and services bought by households rise or fall – produced to international standards. It is the inflation measure used in the government’s target. The YoY reading compares prices in the reference month to a year earlier. Generally, a high reading is seen as bullish for the Pound Sterling (GBP), while a low reading is seen as bearish.
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