GBP to USD Forecast: 40 Year High UK Inflation Rate Vs. GBPUSD

Summary:
• The British Pound (GBP) is increasingly looking likely to start losing its value. This is after the latest data on inflation

The British Pound (GBP) is increasingly likely to lose its value. This is after the latest data on inflation and investors’ fears that the economy will likely enter a recession.

According to data released on Wednesday, The UK recorded the highest rate of inflation in 40 years in the month of May. This is after the consumer price index rose by 9 per cent, according to the latest ONS data. The recent inflation rate, which had remained relatively low compared to the US, has seen the UK surpass other economies such as Germany, France and the US.

Looking at the cable (GBPUSD) price chart, today’s trading session is continuing yesterday’s bullish trend that saw the price rise by about one per cent. Currently trading at 1.2542, today’s session is likely to see GBPUSD continue to trade higher.

GBP to USD Price Prediction

The GBPUSD price for the next few weeks will depend on how the UK government react to the latest inflation reports. There is huge anticipation of the likelihood that the Bank of England will result in raising interest rates to address the current inflation rates.

If the Bank of England ends up raising the interests, I anticipate a strengthened GBP, which is likely to result in GBPUSD continuing to rise. The past few days have also seen the weakening of the USD, which has allowed GBPUSD to continue rising in the markets.

However, it is possible that the Bank of England will not raise the interest rates. This is likely to further weaken the GBP. However, the market reaction may not be as straightforward as a weakening GBP means a dropping GBPUSD. We are currently seeing a GBPUSD price increase because the greenback is also losing value at a higher rate than the GBP.

Therefore, my GBPUSD price prediction expects cable to hit the 1.2600 price level in the next few trading sessions. There is also a high likelihood that we might see the prices rising to the 1.26400 price level. However, should the US address their inflation rates faster than the UK, then my trade analysis will be invalidated. It will also mean a possible bearish move. I expect the prices to move below 1.2300 if that happens.

GBPUSD Price Chart