GBP/USD consolidates above 1.3450 with muted reaction to US inflation data

The British Pound (GBP) trades under pressure against the US Dollar (USD) on Friday, snapping a three-day winning streak as the Greenback holds firm. GBP/USD is finding a footing above 1.3450 during the American session, stabilizing after the release of the US Personal Consumption Expenditures (PCE) Price Index for July, which came broadly in line with expectations.

Data from the Bureau of Economic Analysis showed that the Core PCE Price Index rose 0.3% month-on-month in July, matching forecasts and unchanged from June’s pace. On a yearly basis, core inflation edged up to 2.9% from 2.8%, marking its highest level since February. Headline PCE increased 0.2% MoM, in line with estimates but slightly softer than June’s 0.3%, while the yearly rate held steady at 2.6%.

The report also confirmed strong underlying demand. Personal spending grew 0.5% in July, ahead of the expected 0.3% and faster than June’s 0.3% gain. Personal income rose 0.4% MoM, in line with consensus and above the prior 0.3%, reinforcing evidence that household consumption remains resilient despite signs of a softer labor market.

The Greenback extends its firmer tone on the back of these figures, with the US Dollar Index reclaiming levels near 98.00. While Sterling pares back from recent highs, the pair is managing to stay afloat above 1.3450, suggesting that much of the inflation outcome was already priced in. The muted response leaves GBP/USD consolidating, with intraday momentum capped by a stronger US Dollar backdrop.

Technically, immediate support for GBP/USD is seen at 1.3400, followed by the 100-day Exponential Moving Average (EMA) at 1.3368 on the daily chart. On the upside, Thursday’s high at 1.3530 offers the first resistance, ahead of the August 14 peak at 1.3594. A break beyond these levels would open the door for further gains, while failure to hold above 1.3400 could invite deeper corrective pressure.