Pound Sterling Week Ahead: Core PCE, Bailey and Eurozone CPI in Focus (26–29 May 2026)

Pound sterling is forecast to trade between 1.3320 and 1.3580 against the US dollar and between 1.1480 and 1.1680 against the euro in the holiday-shortened trading week of 26 May 2026. The week is dominated by three events: US Core PCE inflation on Thursday, Bank of England Governor Bailey’s speech on Friday, and eurozone flash CPI also on Friday. UK inflation fell to 2.8% in April from 3.3% in March — a softer print that puts more weight than usual on Bailey’s tone.

This is a four-day trading week with a heavy back end. London and New York are both closed Monday 25 May (UK Spring Bank Holiday and US Memorial Day), so liquidity builds from Tuesday. The week then accelerates into two days of binary events: US Core PCE and an ECB Lagarde speech on Thursday, followed by eurozone flash CPI, the BoE Bailey speech, and Canadian GDP on Friday. Add a Reserve Bank of New Zealand rate decision on Wednesday and a barrage of Federal Reserve speakers, and sterling faces more cross-currency catalysts in four sessions than it had across the previous fortnight.

Where sterling closed last week

Sterling enters the new trading week as the standout performer in May. GBP/USD gained 0.81% over the week to 1.3434 on 22 May. Against the euro, sterling sits near 1.158 — close to the upper end of its 2026 range. Against the broader basket, the pound has been supported by UK interest rate expectations holding up better than those of the eurozone, even as US dollar strength faded.

Source: rates as published 22 May 2026. Sterling’s gains have come despite a Bank of England that voted 8–1 to hold rates at 3.75% in April, with one MPC member preferring a hike. The market has read that split as a sign the next move is more likely to be a hold than a cut — until last week’s inflation data.

What’s driving sterling in the week ahead

Three threads run through the week from a sterling perspective:

• UK inflation has surprised lower. CPI dropped to 2.8% in April from 3.3% in March, with services inflation at 3.2% (its lowest since January 2022). The Bank of England’s own April projection had CPI rising to 3.1% in Q2 — the data is undershooting that path. This is dovish for sterling because it brings the case for a June or August BoE cut back into view.
• Bailey speaks Friday into a new data picture. The BoE Governor’s speech on Friday 29 May at 08:20 GMT is the most important UK event of the week. The market wants to know how the MPC reads the inflation undershoot — as a one-off energy-price effect, or as evidence that domestic price pressures are easing faster than expected.
• US Core PCE Thursday will reset the dollar side of every sterling cross. Sterling’s path against the dollar this week is less about UK fundamentals than about whether the Fed becomes more or less likely to cut in the autumn.

Pound sterling (GBP) outlook: Bailey holds the key

Sterling has had a strong May against the dollar, with GBP/USD climbing back toward 1.34 after touching the low 1.32s earlier in the month. Against the euro, sterling is trading near 1.158 — close to the upper end of its 2026 range. Against the broader basket, the pound has been one of the better-performing G10 currencies this year.

The week’s headline event for GBP is Bank of England Governor Bailey’s speech on Friday 29 May at 08:20 GMT. With UK CPI now at 2.8% — meaningfully below the Bank’s own April projection of 3.1% for Q2 — and Bank Rate held at 3.75% since the December 2025 cut, the market needs Bailey to address the inflation undershoot directly.

Two scenarios:

• If Bailey treats April’s softer print as a temporary energy-driven effect and reiterates that domestic services inflation remains sticky, sterling holds its recent strength. Markets continue to price a hold at the 18 June meeting and GBP/USD pushes the upper end of the 1.3320–1.3580 range.
• If Bailey acknowledges the easing in services inflation and opens the door to an earlier cut, sterling weakens on rate expectations repricing. GBP/USD revisits the lower half of the range; GBP/EUR slips back toward 1.150.

BoE Deputy Governor Breeden and Deputy Governor Lombardelli both speak earlier on Thursday — Lombardelli before market open and Breeden in the afternoon — providing texture before Bailey’s main intervention. The June 18 MPC meeting is the next live decision point.

“Bailey’s framing of the inflation undershoot is the single most important UK event for sterling this week,” says Anthony Bull, CEO of Cambridge Currencies. “The data has moved faster than the Bank’s April projection. If he validates that, the pound has further to fall this summer than the market currently expects.”

UK domestic data this week is light — Thursday evening’s BRC Shop Price Index and Friday morning’s Nationwide Housing Prices are the only scheduled UK macro releases. The week is dominated by speaker positioning rather than scheduled prints.

GBP outlook for the week: GBP/USD is forecast to range between 1.3320 and 1.3580. GBP/EUR is forecast between 1.1480 and 1.1680. Risk skews to the downside on a dovish Bailey, to the upside on a hawkish hold.

Euro (EUR) outlook: Lagarde Thursday, flash CPI Friday

The euro had a softer week, with EUR/USD closing at 1.1602 on 22 May after slipping 0.21%. The pair has been hemmed in by the contrast between a Fed that may yet cut and an ECB that is now openly discussing whether the next move could be a hike. For sterling holders looking at GBP/EUR, the euro’s path matters because a weak euro extends sterling’s gains; a firming euro caps them.

The ECB held all three key rates unchanged at its 30 April meeting — the deposit facility at 2.00%, main refinancing at 2.15%, and marginal lending at 2.40%. ECB President Christine Lagarde flagged that “the upside risks to inflation and the downside risks to growth have intensified,” citing the war in the Middle East and the energy price impact. Headline eurozone inflation was 3% in the April flash reading, against a 2% target.

The eurozone calendar:

• Thursday 28 May: ECB President Lagarde speech (07:20 GMT), ECB Monetary Policy Meeting Accounts (the minutes from the 30 April decision), plus speeches from ECB board members Lane, Schnabel and Cipollone. Eurozone Business Climate, Consumer Confidence and Economic Sentiment Indicator.
• Friday 29 May: Eurozone flash HICP and CPI (MoM and YoY) — the main release of the week for the euro. German regional inflation prints precede the bloc-wide figure.

The flash CPI on Friday is the key print. A reading at or above 3% reinforces the ECB’s hawkish hold and supports the euro — which would cap GBP/EUR. A sub-3% print revives the cutting narrative and weighs on EUR/USD, which would extend sterling’s gains against the euro.

EUR outlook for the week: EUR/USD is forecast to trade between 1.1480 and 1.1680. For sterling holders, a weaker euro through the week could see GBP/EUR push toward the upper end of its 2026 range above 1.165.

US dollar (USD) outlook: Core PCE is the binary event

The dollar enters the week with the Federal Reserve in an awkward position. Powell’s term as Chair expired on 15 May, and the question of who replaces him — and what stance they adopt — is now a live source of uncertainty that the dollar is having to absorb alongside the data flow.

The Fed kept the federal funds rate at 3.50%–3.75% at its April meeting, with four members dissenting in an 8–4 vote — the first time since October 1992 that four FOMC members dissented. Some pushed for a cut; others objected to language retaining an easing bias. That signal — that the Fed is divided — caps how much the dollar can rally on hawkish data and limits how far it can fall on dovish data.

The week’s data and speaker calendar is dense:

• Tuesday 26 May: US Housing Price Index, Consumer Confidence (markets reopen after Memorial Day with thin liquidity).
• Wednesday 27 May: Fed Kashkari, Logan and Cook speeches. ADP Employment Change 4-week average.
• Thursday 28 May: US Core PCE Price Index (MoM and YoY) — the headline event. Also: Q1 GDP Annualized (second estimate), Durable Goods Orders, Personal Income and Spending, Initial Jobless Claims, plus Fed Jefferson, Goolsbee, Williams and Musalem speeches.
• Friday 29 May: Chicago PMI, Fed Bowman and Paulson speeches.

Core PCE is the print to watch for the dollar — the Fed’s 2% inflation target is measured against this series, not CPI. A reading above 2.8% year-on-year would reinforce the case for an extended hold and support the dollar against sterling. A softer print revives the conversation about a September cut and would weaken the dollar — extending GBP/USD’s recent gains.

USD outlook for the week: DXY is forecast to trade between 98.50 and 100.20, with the wider range likely activated only if Core PCE surprises by 0.2 percentage points or more relative to consensus. For sterling, the practical question is whether Core PCE keeps GBP/USD pinned near 1.34 or allows a push toward 1.36.

Other majors at a glance

The Reserve Bank of New Zealand decision on Wednesday is the only scheduled rate change opportunity of the week. For sterling crosses with these majors — GBP/AUD, GBP/NZD, GBP/JPY, GBP/CAD — the moves will be driven by the other side rather than by anything UK-specific.

What this means for sterling transfers

For anyone planning a transfer over the next ten days, the timing question matters more than usual this week. Three practical points:

If you are buying USD with sterling, GBP/USD is sitting near the upper end of its three-month range. A hawkish Bailey on Friday combined with a soft Core PCE Thursday could push the pair toward 1.36 — favourable for sterling sellers. A dovish Bailey combined with strong Core PCE could see the pair back toward 1.33 quickly. Forward contracts allow you to fix today’s rate for a future settlement up to 12–24 months out, which is useful when an exchange rate is favourable but a transfer date is some weeks away. Read our explainer on forward contracts for how they work in practice.

If you are buying EUR with sterling, GBP/EUR is near 1.158 — close to the upper end of its 2026 range. Friday’s eurozone flash CPI is the swing event. A soft print would push GBP/EUR higher; a firm print would cap it. If you have a transfer that absolutely must clear before mid-June, locking part of it before Friday makes sense. For more on weighing rate timing decisions, our guide on whether now is a good time to exchange money walks through the key questions.

For business clients with regular sterling exposure, this is a week where a clear hedging strategy pays off. The combination of Core PCE, eurozone CPI, Bailey and an RBNZ decision could move major pairs by 1.5–2.5% in either direction depending on the surprises. Our guidance on currency risk for businesses covers the main tools — spot, forward, market orders — and when each fits.

How a specialist broker helps in weeks like this

Volatile data weeks are where the gap between bank exchange rates and specialist rates widens most visibly. Banks tend to widen their margins around scheduled events; specialist brokers can hold tighter pricing and offer tools — forwards, market orders, limit orders — that banks typically don’t provide to private clients. At Cambridge Currencies, every transaction is completed by phone with a dedicated specialist who can talk through timing and structure before any transfer is committed.

If you have a sterling transfer planned for the next few weeks and want to talk through the data calendar before you fix anything, speak to a Cambridge Currencies specialist about your transfer. All conversations are with a named specialist on the phone — there is no online transaction system to navigate, and no decision is made until you are comfortable with both rate and timing. Cambridge Currencies operates under FCA-authorised partners Currencycloud (FRN 900199) and ScioPay (FRN 927951).

Related guides

• GBP/USD Forecast — full long-form outlook for the pound–dollar pair
• GBP/EUR Forecast — pound–euro analysis and rate history
• Is Now a Good Time to Exchange Money? — how to weigh rate timing decisions
• Weekly Currency Forecast hub — every weekly update in one place