Home Daily Commentaries USD sell-off after CPI data released

USD sell-off after CPI data released

Written by Rory Panton
| Wednesday 13 August, 2025

Daily Currency Update

GBP extended its lead over the US Dollar yesterday as US Inflationary data comes out ever-so slightly below forecast at 2.7% y/y vs its 2.8% y/y forecast with traders going all in that the US Federal reserve (FED) will cut rates in September. This caused GBP to climb to 1.352 before stabilising at the 1.35 mark overnight. The US Treasury Secretary Scott Besant has also said that he demanded a 0.5% cut from the Fed, increasing the sell-off further. The Pound had a more muted session against the EURO with investors betting on further Bank of England rate cut after UK jobs data erasing most of the Pounds morning gains.

The euro performed strongly yesterday, gaining against both the pound and the dollar. Despite subdued economic sentiment from Germany, it recovered all its morning losses versus sterling. US inflation data pointing toward a potential rate cut helped push the euro to a two-week high, breaking through the 1.17 level against the dollar this morning. Additional support came from growing optimism over possible talks between US President Donald Trump and Russian President Vladimir Putin in Alaska on Friday, aimed at lifting sanctions.

Key Movers

In the US, yesterday’s Consumer Price Index (CPI) figures strengthened expectations for a Federal Reserve interest rate cut in September, pushing both US yields and the dollar lower. Annual CPI came in at 2.7%, just under the 2.8% forecast, showing little sign of tariff impact. Combined with a softening labour market, the data gives strong backing for a rate cut next month. The US Treasury Secretary has even called for a 0.5% reduction, double the likely 0.25% cut. The dollar extended its losses, falling below 0.855 against the euro and 0.74 against the pound. President Trump is due to speak later today—if he echoes the Treasury Secretary’s call for a sharper cut, further dollar weakness could follow.

Expected Ranges

  • GBP/USD: 1.347 - 1.36 ▲
  • GBP/EUR: 1.153 - 1.16 ▲
  • GBP/AUD: 2.06 - 2.075 ▲
  • EUR/USD: 1.167 - 1.175 ▲