GBP/USD edges higher to near 1.2700 ahead of UK CPI inflation data

GBP/USD appreciates due to reduced expectations of another rate cut by the Bank of England this year.

The UK’s CPI inflation is projected to increase 2.2% YoY and 0.5% MoM in October.

The US Dollar may appreciate as traders expect pro-inflationary policies from the incoming Trump administration.

GBP/USD continues to gain ground for the third successive session, trading around 1.2690 during the Asian hours on Wednesday. The Pound Sterling (GBP) strengthens as markets price in less than a 20% chance of another rate cut from the Bank of England (BoE) this year, following the BoE Monetary Policy Report Hearings on Tuesday, where the central bank described interest rates as "moderately restrictive."

On Wednesday, traders await key UK data, including the Consumer Price Index (CPI) inflation and Retail Price Index (RPI) figures for October. These numbers could influence the Bank of England's (BoE) decision on whether to pursue additional rate cuts this year.

The UK’s CPI inflation is projected to rise to 2.2% year-on-year in October, up from 1.7% the previous month. The monthly CPI for October is expected to increase by 0.5%, compared to a flat 0.0% in September. Additionally, the Retail Price Index (RPI) is likely to have grown by 3.4%, up from 2.7% previously.