Important UK data greets the Pound later this morning- GBP/USD edges back from new 2025 high

Eventually the GBP/USD managed to forge out a US close above 1.26 last night, ending the day at 1.2613. The start of the Asian session today saw it push higher again and it lifted to a new 2025 high, at 1.2640. That high coincided with a further fall in the EUR/GBP. Indeed, arguably the move in the GBP/USD was all about the EUR/GBP, which fell back to 0.8266. So, what was the ultimate driver behind these moves? Well, it seems to rest with the latest UK inflation data which is due out at 7am GMT this morning. You see, the markets are expecting some big numbers in the longer-term readings for UK CPI and RPI a little later. However, not so on the January monthly count (expected to fall), but core annualised CPI is expected to rise to 3.7% from the prior reading of 3.2%. A less dramatic rise is expected in the RPI reading (to around 3.7% from 3.5%). The CPI Services annualised rate is forecast to rise to 5.1% from 4.4% and that might be the kicker later on. We shall have to see on that. The BOE can be as dovish as they like when it comes to their latest rhetoric (Bailey spouting yesterday), but if those inflation expectations match, or even exceed the forecasts, the Old Lady is going to have a hard time squaring that circle with lower monetary policy adjustments in the next 3 months. That is what has pushed the Pound higher. It is currently off the earlier high now, but come 7am GMT it might be a different story. The GBP/USD is right now at 1.2618