GBP/USD holding 1.3500 handle post-US CPI and Bank of England Super Thursday

• The GBP/USD is on a roller-coaster as the US inflation came slightly below expectations and the Bank of England earlier sounded dovish. 
• The GBP/USD is stabilizing above the 1.3500 handle as the market is weighing the barrage of new information from the US and UK.

After being sold all the way down to 1.3480 on the Bank of England dovish monetary policy stance in May Inflation report, the GBP/USD was able to regain some of the previous losses to trade around 1.3532 down 0.12% on Thursday after the US inflation data for the month of April came below consensus.

The US core Consumer Price Index year-on-year for April came below expectations at 2.1% versus 2.2% forecast by analysts. If inflation is lower the market can become worried that the Fed might be more cautious in hiking rates. 

The GBP/USD traded slightly above the 1.3600 handle in the European session and fell back to the 1.3500 handle on the back of Bank of England’s dovish comments. 

Earlier, the market interpreted the words of the Bank of England as dovish, but market participants might be over-reacting according to ING analysts. “Importantly, the Bank still feels that further “ongoing” tightening would be “appropriate”, and all of this makes us think that policymakers still have a preference to hike in August if the data allows them to.” analysts at ING Bank wrote in a research note.