BoE-Fed Divergence Could Support GBP Recovery
The Bank of England has signaled its willingness to maintain restrictive policy longer than the Fed, citing persistent wage inflation and services strength in the UK economy. With U.S. CPI data due today, there’s potential for a short-term USD spike, but also a reversal if inflation undershoots. If that happens, the market may reprice expectations for the Fed more dovishly, reinforcing the case for GBP upside.

UK Unaffected by Tariff Noise (For Now)
Unlike the eurozone, the UK is not directly caught in the trade crossfire between the U.S. and EU. This may insulate the pound slightly and help GBP act as a secondary USD play especially if EUR weakness becomes overextended.

GBP Positioning Looks Cleaner Than EUR
Commitment of Traders (COT) data and institutional flow metrics suggest that EUR remains heavily positioned relative to GBP. This means GBP may have more room to rebound once the CPI dust settles especially if BoE commentary continues to lean hawkish.

 GBP/USD offers a cleaner tactical long on dips. If U.S. CPI comes in softer or if risk sentiment stabilizes, GBP is likely to benefit more quickly than EUR given less headline pressure and a more hawkish central bank stance.

LONG GBPUSD

Jul 15 2025