GBP/USD advances towards 1.2480 after US inflation report and mixed UK data

• The GBP/USD pair experiences a significant recovery, rising more than 1.70% to trade around 1.2490, boosted by the latest US inflation data.
• Annual inflation in October in the US registered the largest drop in the last three months, standing at 3.2%.
• The lower-than-expected US CPI and core CPI figures justify a less hawkish approach from the US Federal Reserve.

He GBP/USD rebounded sharply on Tuesday after a report on inflation in the United States (US) raised the chances that the Federal Reserve (Fed) will finish raising interest rates, while data from the United Kingdom was mixed. The major pairs are trading around 1.2480 and are up over 1.70%, with buyers eyeing the 1.2500 figure.

Pair Nears Key 1.2500 Level as Weaker US CPI Data Causes Dollar to Fall Sharply

The US Bureau of Labor Statistics (BLS) reported that inflation in October cooled more than expected, with the Consumer Price Index (CPI) hitting 3.2% at a 12-month pace from 3.7% , with the monthly figures cooling to 0% below the 0.1% expected by most economists. The same report revealed that the core CPI, which excludes volatile items and is considered a more stable indicator of inflation, fell one tenth and was below estimates and the previous month’s reading of 4.1% to 4%, for below estimates of 4.1%.

This data has caused the Dollar to plummet, as the US Dollar Index (DXY) plummets more than 1.40% to 104.13, after hitting a daily high of 105.73, weighed down by US Treasury yields. . The US benchmark 10-year note rate plunges more than 18 basis points to 4.45%, a level last seen on September 22, 2023.

Consequently, GBP/USD shrugged off a mixed UK employment report, which saw wages slow, while the economy added more jobs than the -198,000 contraction expected by analysts. , with figures of 54,000.

The GBP/USD pair is on the verge of reclaiming the 1.2500 level, despite comments from Bank of England Chief Economist Huw Pill that the Bank of England would have to continue raising rates.

The focus is on Wednesday’s data, in which UK inflation is expected to fall below 5%, from 6.7% in September. Excluding volatile items, it is forecast at 5.8% from 6.1%. In the United States, the Producer Price Index (PPI), retail sales, the New York Fed’s Empire State Manufacturing Index and data from the Federal Reserve will be published.

GBP/USD Technical Levels