GBP/USD nears 1.30 after US CPI inflation accelerates

  • GBP/USD shook on Thursday, losing a tenth of a percentage point.
  • US CPI inflation data beat expectations, dashing hopes for rate cuts.
  • Coming Friday: UK GDP and production figures, PPI and US UoM sentiment.

GPB/USD was choppy on Thursday, struggling just north of the 1.3000 level before trimming 0.1% on the day. The US dollar was strengthened by an error in the US Consumer Price Index (CPI) inflation figures, which turned out to be higher than markets expected. A flurry of data from the UK and US is expected on Friday, giving the Cable a tense end to an otherwise quiet week.

US headline CPI inflation fell less than expected in the year ending in September, declining from 2.5% to 2.4%. Median market forecasts had predicted a figure of 2.4% year-on-year. On the other hand, US core CPI inflation increased year-on-year in September, rising to 3.3% from 3.2% previously.

Initial jobless claims in the US unexpectedly rose in the week ending October 4, rising to 258,000 week-over-week and reaching the highest rate of new jobless claimants since June 2023.

Mixed data impacting rates confused rate markets on Thursday. Rising unemployment numbers raise hopes for rate cuts as the Federal Reserve (Fed) seeks to keep the US labor market afloat, while still-high inflation makes it difficult for investors to expect further pace and depth. rapid rate cuts.

Friday presents a packed data agenda for Cable operators. UK Gross Domestic Product (GDP) figures for August will kick off, and are expected to rise to 0.2% month-on-month in August from the previous month’s flat figure of 0.0%. Both UK Manufacturing Production and Industrial Production are expected to recover in August. Manufacturing Production is expected to recover to 0.2% m/m compared to the previous contraction of -1.0%, while Industrial Production is forecast to rebound to 0.2% m/m from -0.8% previously.

US Producer Price Index (PPI) inflation will continue during the US market session. The underlying September PPI figure for the year ended September is expected to accelerate to 2.7% year-on-year from 2.4% last month.

GBP/USD Price Forecast

The GBP/USD pair is currently trading at 1.3056, showing a minor drop of 0.11% on the day. The price action suggests an emerging bearish trend after a period of consolidation near the 50-day EMA, currently at 1.3108. The pair recently broke below this key technical level, indicating further downward momentum. The 200-day EMA, at 1.2840, acts as a crucial support zone, which could be tested if the selling pressure continues to increase. Bearish candle patterns in recent sessions support the view that sellers are in control.

The Moving Average Convergence/Divergence (MACD) indicator further supports the bearish outlook. The MACD line has crossed below the signal line, with the histogram showing increasing negative bars. This suggests that the downward momentum is gaining strength. The pair may find it difficult to break above the 50-day EMA in the short term, which has now become a resistance level. If the current downtrend persists, the next area of ​​interest for traders would likely be the psychological level of 1.3000, followed by the support level of 1.2840 near the 200-day EMA.

In a broader context, GBP/USD price action appears to be in a corrective phase after its significant uptrend from July to early September. The pair’s recent highs around 1.3400 now look increasingly distant as downside risks dominate. With the MACD reinforcing the bearish signal and the price unable to sustain above the 50-day EMA, further declines are likely unless a significant reversal occurs. Upcoming key economic data, including inflation reports and central bank decisions, could play a pivotal role in determining the pair’s next move.

GBP/USD daily chart

The British Pound FAQs


The British Pound (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded currency unit in the world, with 12% of all transactions and an average of $630 billion per day, according to 2022 data.
Its key currency pairs are GBP/USD, also known as “Cable”, which represents 11% of the forex market, GBP/JPY, or the “Dragon” as it is known to traders (3%), and EUR/GBP (2%). The pound sterling is issued by the Bank of England (BoE).


The most important factor influencing the value of the Pound Sterling is the monetary policy decided by the Bank of England. The Bank of England bases its decisions on achieving its main objective of “price stability”, that is, a stable inflation rate of around 2%. Its main tool to achieve this is the adjustment of interest rates.
When inflation is too high, the Bank of England tries to contain it by raising interest rates, which makes access to credit more expensive for individuals and companies. This tends to be positive for the GBP, as higher interest rates make the UK a more attractive place for global investors to park their money.
When inflation is too low, it is a sign that economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to make credit cheaper, so that companies borrow more to invest in projects that generate growth.


The published data gauges the health of the economy and may influence the value of the Pound sterling. Indicators such as GDP, manufacturing and services PMIs, and employment can influence the direction of the Pound.
A strong economy is good for the British pound. Not only does it attract more foreign investment, but it may encourage the Bank of England to raise interest rates, which will directly strengthen the Pound. Otherwise, if economic data is weak, the pound is likely to fall.


Another significant data for the pound sterling is the trade balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports during a given period.
If a country produces highly sought-after exports, its currency will benefit exclusively from the additional demand created by foreign buyers wishing to purchase these goods. Therefore, a positive net trade balance strengthens a currency and vice versa for a negative balance.

Source: Fx Street

You may also like