The British Pound gained ground early Wednesday after fresh UK inflation data came in stronger than expected. At the same time, the US Dollar continued to weaken, weighed down by trade tensions with China and political uncertainty at home.
According to the UK’s Office for National Statistics (ONS), the Consumer Price Index (CPI) rose 3.5% year-over-year in April, up from 2.6% in March and higher than the 3.3% forecast. On a monthly basis, CPI jumped 1.2%, following a 0.3% rise in March. The core CPI, which excludes food and energy prices, increased 3.8% annually—also beating expectations of 3.6%.
In response, the Pound strengthened sharply. GBP/USD surged above 1.3450, reaching its highest level since February 2022.
Meanwhile, the US Dollar remained under pressure. The Dollar Index fell near 99.50 on Wednesday, dropping about 0.5% for the day. This decline reflects ongoing worries over US political developments and deteriorating trade relations with China.
On the trade front, China’s Commerce Ministry criticized US policies targeting Chinese tech exports. It described the restrictions on advanced chips as “unilateral bullying and protectionism.” China also accused the US of violating international trade rules by misusing export controls.
In domestic news, House Republicans are facing resistance in passing former President Donald Trump’s tax bill. The Congressional Budget Office (CBO) warned that the legislation could increase the national debt by $3.8 trillion.
The weak Dollar helped other currencies strengthen. EUR/USD continued to rise and approached 1.1350 during the early European session. Investors are watching for the European Central Bank’s Financial Stability Review, due later in the day.
In Asia, Japan reported a 2% annual rise in exports for April, matching expectations. Imports, however, fell by 2.2%. The Yen gained modestly, with USD/JPY slipping toward 143.50.
Elsewhere, gold prices benefited from the cautious market mood. Spot gold (XAU/USD) gained nearly 2% on Tuesday and continued its upward move Wednesday, trading comfortably above $3,300 with a daily gain of about 1%.
The Canadian Dollar also strengthened against the US Dollar. USD/CAD fell below 1.3900, continuing its downward trend from earlier in the week. This move followed a report from Statistics Canada showing that inflation cooled to 1.7% in April, down from 2.3% in March.
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