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Sterling Slips After CPI: What Importers Need to Know Before Powell’s Speech

Lamera Capital

2025-08-21

Sterling Slips After CPI: What Importers Need to Know Before Powell’s Speech
Lamera Guidance: What’s Happening This Week in FX

For UK Businesses Buying in USD/EUR
Sterling’s CPI Surprise, But No Follow-Through

UK inflation surprised hotter in July at 3.8%, with airfares, fuel and food pushing the index higher. Services inflation stuck around 5% reinforced the idea that the Bank of England won’t rush into further rate cuts.

Normally, that backdrop would give the Pound a lift. But markets have chosen a different narrative. Instead of extending gains, Sterling has slipped back, reflecting investor concern about weak UK growth and positioning ahead of tomorrow’s real headline event: Fed Chair Powell at Jackson Hole.

Bottom line so far: CPI gave Sterling a short burst, but it’s fading. Importers paying USD or EUR invoices should not assume CPI strength automatically equals GBP strength.
All Eyes on Powell's speech at Jackson Hole Tomorrow

Friday’s Jackson Hole speech is a market mover. Powell is walking a tightrope:
  • If he leans dovish (rate cuts soon): the USD usually weakens, giving GBP/USD and EUR/USD a lift.
  • If he sounds cautious (not rushing to cut): the USD can rebound sharply, undoing this week’s Sterling support.

This is Powell’s last Jackson Hole as Fed Chair, and he faces pressure from Trump and the White House. Markets currently price a September rate cut, but Powell may push back if inflation risks dominate.

What This Means for GBP Sellers, USD/EUR Buyers.

The tug-of-war is clear:
  • Sterling support from sticky UK inflation is being offset by growth worries and a stronger USD.
  • Volatility is high into Jackson Hole, and sudden GBP swings could appear tomorrow.
The Importer Playbook (this week):
  1. Don’t wait for certainty. Use any GBP rallies (before or after Powell) to secure part of Q4 exposure.
  2. Cover your exposure. Book forwards aligned to invoice dates; supplement with spot on Sterling strength.
  3. Set market orders. Let GBP strength trigger automatic buys while you’re focused on operations.
  4. Protect the downside. Stop-loss orders cap the risk if Powell sparks a USD surge.

Longer term: Will GBP Keep Rising?

  • Why it could: Sticky UK inflation, fewer BoE cuts, Powell signalling easing ahead.
  • Why it might not: Weak UK growth, Powell pushing back on September cuts, stronger USD.
Sensible Approach: Don’t chase the “perfect” level & use rallies to build cover steadily.

Lamera helps by aligning your forward cover to your invoices, we will manually monitor the market and help you with the timing of trades. We can also set market orders so execution happens automatically. You benefit when Sterling spikes, and stay protected if Powell’s speech turns the market out of your favour. 


Related Analysis:
- How FX forward contracts protect your business
- Weekly FX outlook covering GBP trends

Get in touch and we’ll turn your Q4 purchase schedule into a set-and-go spot/forward plan, locking in GBP-strength savings and keeping you protected if the move fades.