Pound sterling slides ahead of key US inflation report
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The British Pound remains near a three-month low around 1.2750 against the US Dollar, as markets anticipate pivotal US inflation data set for release. Weak UK labor market numbers and strong US Dollar performance are adding to GBP/USD pressure. Market watchers await speeches from Bank of England's Catherine Mann and key Federal Reserve figures for further rate guidance, as bets on a Fed rate cut in December slightly wane. This mix of factors drives GBP’s bearish momentum, underscoring investor caution as Pound Sterling faces key support and resistance levels.
Pound Sterling Edges Lower Amid US Inflation Anticipation
The British Pound trades close to a recent low against the US Dollar as investors brace for October’s US Consumer Price Index (CPI) release at 13:30 GMT. The CPI data, expected to show headline inflation rising to 2.6% year-over-year, holds the potential to influence the Federal Reserve’s policy outlook. While economists predict a modest increase in monthly inflation, a surprise could impact the likelihood of a Fed rate cut in December, currently projected at a 62% probability by the CME FedWatch tool.
Fed Speakers and Inflation Data in the Spotlight
As markets scrutinize inflation trends, recent Fed commentary indicates confidence in a downward inflation trajectory, though officials such as Neel Kashkari remain cautious. Should US inflation exceed expectations, this could prompt a reassessment of the Fed’s restrictive stance. Adding to Pound Sterling’s weakness is last week’s disappointing UK labor data, which showed unemployment rising to 4.3% and a sharp drop in payrolls. These figures have led some analysts to speculate on a potential Bank of England rate cut.
Technical Analysis: GBP/USD Eyes Key Support Levels
Technically, GBP/USD remains under pressure, trading below its 200-day Exponential Moving Average (EMA) around 1.2860, with bearish momentum firmly in place. The 14-day Relative Strength Index (RSI) remains below 40, signaling potential further downside. A break below the August low of 1.2665 could intensify bearish momentum. Alternatively, a move above 1.3000 would provide some psychological relief for GBP bulls.
With volatility expected, Pound Sterling’s trajectory hinges on today’s inflation data and Fed officials’ insights, keeping investors on high alert as the year-end approaches.
Pound Sterling Edges Lower Amid US Inflation Anticipation
The British Pound trades close to a recent low against the US Dollar as investors brace for October’s US Consumer Price Index (CPI) release at 13:30 GMT. The CPI data, expected to show headline inflation rising to 2.6% year-over-year, holds the potential to influence the Federal Reserve’s policy outlook. While economists predict a modest increase in monthly inflation, a surprise could impact the likelihood of a Fed rate cut in December, currently projected at a 62% probability by the CME FedWatch tool.
Fed Speakers and Inflation Data in the Spotlight
As markets scrutinize inflation trends, recent Fed commentary indicates confidence in a downward inflation trajectory, though officials such as Neel Kashkari remain cautious. Should US inflation exceed expectations, this could prompt a reassessment of the Fed’s restrictive stance. Adding to Pound Sterling’s weakness is last week’s disappointing UK labor data, which showed unemployment rising to 4.3% and a sharp drop in payrolls. These figures have led some analysts to speculate on a potential Bank of England rate cut.
Technical Analysis: GBP/USD Eyes Key Support Levels
Technically, GBP/USD remains under pressure, trading below its 200-day Exponential Moving Average (EMA) around 1.2860, with bearish momentum firmly in place. The 14-day Relative Strength Index (RSI) remains below 40, signaling potential further downside. A break below the August low of 1.2665 could intensify bearish momentum. Alternatively, a move above 1.3000 would provide some psychological relief for GBP bulls.
With volatility expected, Pound Sterling’s trajectory hinges on today’s inflation data and Fed officials’ insights, keeping investors on high alert as the year-end approaches.