The British pound rose slightly in European trading on Wednesday against a basket of global currencies, moving into positive territory against the US dollar as the greenback slowed following recent White House comments regarding progress in peace talks between the United States and Iran.

Prominent British media outlets reported that Prime Minister Keir Starmer has decided to step down from office in response to mounting pressure and a broad internal revolt led by lawmakers from the ruling Labour Party.

Investors are awaiting key UK inflation data for April later today in order to reassess expectations surrounding British interest rates.

Price overview

GBP/USD today: The pound rose by less than 0.1% against the dollar to $1.3407, from the days opening level at $1.3396, after touching an intraday low of $1.3378.

Sterling lost 0.3% against the dollar on Tuesday, resuming losses that had paused the previous session during a rebound from a six-week low of $1.3303.

The US dollar

The US Dollar Index slipped by less than 0.1% on Wednesday, pulling back from a six-week high of 99.43 points, reflecting slower momentum in the US currency against a basket of major global currencies.

Beyond profit-taking activity, the dollar weakened after recent comments from President Donald Trump and Vice President JD Vance regarding developments in peace negotiations between the United States and Iran.

Trump stated that he would end the war with Iran very quickly, expressing confidence in resolving the conflict, while Vice President JD Vance said the United States and Iran had made very significant progress in their ongoing negotiations.

Later today, markets await the release of the minutes from the Federal Reserves latest monetary policy meeting, which are expected to provide stronger clues regarding the possibility of further US interest rate hikes to combat rising inflationary pressures.

Political developments

Major British media sources reported that Prime Minister Keir Starmer has decided to resign in response to intense political pressure and a widening rebellion led by members of the ruling Labour Party.

An official statement or press conference from Starmer outlining the resignation details and transition timetable is expected within the coming hours.

The shift came after Labour lawmakers reportedly rejected his latest attempts to remain in power and blamed him fully for the partys historic and severe defeat in the recent local elections.

British interest rates

The International Monetary Fund said on Monday that the Bank of England does not need to raise interest rates and may instead need to cut them.

Market pricing for a Bank of England rate hike at the June meeting remains steady around 45%.

UK inflation data

To reassess current interest rate expectations, investors are awaiting the release of Britains key inflation figures for April later today, with the data expected to significantly influence the Bank of Englands monetary policy outlook.

At 06:00 GMT, headline consumer price index data is expected to show annual inflation rising 3.0% in April, down from 3.3% in March, while core CPI is expected to slow to 2.6% annually from 3.1% previously.

Outlook for the British pound

At Economies.com, we expect that if UK inflation data comes in below market expectations, the probability of a June Bank of England rate hike will decline, placing additional downward pressure on the British pound.