GBP/USD Price Forecast: Holds modest upside while staying anchored above 100-day EMA support

The GBP/USD pair trades on a positive note around 1.3550 during the early European trading hours on Wednesday. Nonetheless, the potential upside for the major pair might be limited, as UK political turmoil and ongoing tensions in the Middle East could weigh on the British Pound (GBP) against the Greenback.

UK Prime Minister Keir Starmer is facing rising pressure to set a date for his departure after elections across much of the country resulted in massive losses for his ruling Labour Party. While Starmer stated he will not resign, the resulting political “noise” and rising UK gilt yields have created localized pressure on the GBP.

Traders will closely watch the US Producer Price Index (PPI) report, which is due later on Wednesday. Markets expect the US PPI inflation to rise to 4.9% YoY in April from 4.0% in March. The core PPI, excluding volatile food and energy prices, is expected to show a rise of 4.3% YoY in April versus 3.8% prior. If the report shows a hotter-than-expected outcome, this could boost the US Dollar (USD) and create a headwind for the major pair.