Politically, the UK is on the brink of a major reshuffle ahead of the July 4 elections, with polls predicting a landslide victory for the Labour Party led by Keir Starmer and a heavy defeat for the Conservative Party led by Rishi Sunak after 14 years in power.According to market trading, the yield on the UK’s 10-year government bond rose to 4.14% on strong GDP figures, dampening expectations of interest rate cuts. Furthermore, the UK economy expanded by 0.7% in the first quarter of 2024, beating initial estimates of 0.6% and marking the strongest growth in more than two years. On the price front, the headline inflation rate fell to the Bank of England’s 2% target. Despite this, the Bank of England kept interest rates steady, leading to speculation of a possible rate cut in August.With the July 4 election approaching, opinion polls are pointing to a landslide victory for Keir Starmer’s Labour Party and a major defeat for Rishi Sunak’s Conservatives after 14 years in power, signaling a major political realignment in Britain.In contrast, the headline US inflation reading is helping advocates of a September rate cut. The Federal Reserve could consider cutting US interest rates in September, according to analysts reacting to the headline inflation reading that fell to a three-year low. According to an official announcement, the core personal consumption expenditures index in the US rose just 0.083% on a monthly basis in May, the BLS said, down from an upwardly revised 0.3% in April. Moreover, the figure was in line with the consensus (0.1%) and helped push the annual rate down to 2.6% from 2.8%, the lowest level in three years. Because the figure was in line with expectations, there was limited reaction in the bond and currency markets. Still, the data will help build the case for a Fed rate cut in September, some analysts say.Meanwhile, Paul Ashworth, chief economist at Capital Economics says: “The return to the previous disinflationary trend and the renewed weakness in real activity are consistent with the Fed cutting rates in September,”Particularly, the PCE is a important gauge of inflation for consumers and is therefore closely watched by the Fed. “Fed officials, who are responsible for managing inflation, prioritize the PCE over the CPI when setting the effective federal funds rate,” says Nigel Green, chief executive of DeVere Group.Further refinement of the numbers shows the “super” measure — basic services excluding housing rents — slowing to 0.1% month-on-month, the slowest since August. Also, the data set includes figures showing consumption slowing as interest rates rise. recently, Real consumption rose 0.3% m/m in May, and Q2 consumption growth now trails at just 1.6%. Capital Economics estimates GDP growth has now slowed to 1.8% in Q2, “capping off a weak first half of the year. Like Biden, consumers appear to be stumbling at the wrong time, finally succumbing to the pressure of higher interest rates.” Technical forecasts for the GBP/USD pair today:Today’s bounce and based on the daily chart, GBP/USD has not broken out of the downtrend, which is supported by a move towards the 1.2600 support level. As we mentioned before, there will be no breakout from the downtrend without GBP/USD moving from the 1.2775 and 1.2830 resistance levels respectively. Technically, the move will remain in tight ranges until the reaction to the UK elections and the US jobs numbers are announced. More By This Author:USD/JPY Analysis: No New Ground GainedEUR/USD Analysis: Bearish Stability ContinuesGold Price Analysis: Gold May Be Poised To Recover Recent Losses