GBP/USD extended its gains on Thursday following the release of another inflation report in the United States (US), which increased the odds that the Federal Reserve (Fed) could resume its easing cycle sooner than expected. This, along with a rise in jobless claims, was a tailwind for the Sterling, which trades at 1.3600 against the US Dollar (USD), up by over 0.47%.
The US Bureau of Labor Statistics (BLS) revealed that the Producer Price Index (PPI) in May increased by 2.6% YoY, one-tenth above April's reading. At the same time, core PPI, which excludes volatile items like food and energy, dipped from 3.1% to 3% YoY.

The data, along with the release of softer inflation figures on the consumer side, prompted investors to fully price in 52 basis points of interest rate cuts by the Fed towards the year's end. So far, the effect of controversial tariffs imposed by the Trump administration hasn't been reflected in inflation data.

Other data revealed that the number of Americans filing for unemployment benefits rose. Initial Jobless Claims for the week ending June 7 rose by 248K, unchanged compared to the previous week but above forecasts of 240K.

In the UK, the April Gross Domestic Product (GDP) figures revealed the most significant economic contraction in 18 months, with GDP coming in at -0.3% MoM. Following the data, traders increased bets that the Bank of England (BoE) could continue to reduce rates in 2025, pricing in two rate cuts so far.

Although the number warranted a broad US Dollar weakness, as seen in GBP/USD, this was largely driven by policies implemented in Washington, keeping the USD under pressure.

Ahead, the UK economic schedule will be absent. In the US, traders will eye the University of Michigan Consumer Sentiment.

Source: Fxstreet