British Pound stalls below 1.3400 despite hot UK CPI and BoE hike bets

Source Fxstreet
  • GBP/USD struggles below 1.3400 as geopolitical risks support the Dollar.
  • UK inflation accelerates to 3.5%, driven by higher energy prices.
  • November BoE hike odds reach 95% ahead of crucial Autumn Budget.

The Pound Sterling struggles to extend its gains against the US Dollar on Wednesday, even as inflation in the United Kingdom cemented the case for a Bank of England rate hike at the next meeting, while the Greenback recovers amid heightened geopolitical tensions. The GBP/USD hovers below 1.3400.

Sterling struggles as geopolitical tensions revive Dollar demand despite rising UK inflation

US economic data remains scarce on Wednesday, but market participants are getting some clues about US equities, which trade in the green, boosted by a surge in technology stocks sparked by AI hype. US Treasury yields hold firm, with the US 10-year T-note yield at 5.10%.

Geopolitics are also boosting the Greenback. Even though the news suggested a possible resolution on Tuesday, reports revealed that the Pakistani Army Chief met with Iranian officials in Tehran, where he presented a “compromise proposal,” while N12 news reported that he delivered the US a “final warning.” This means that if Iran does not agree to a peace deal, attacks would resume.

In the UK, the Consumer Price Index (CPI) rose from 3.1% to 3.5% YoY in September, according to the Office for National Statistics (ONS), primarily due to a surge in energy prices sparked by the Middle East conflict.

The data comes after the latest jobs report in the UK revealed a modest rise in wages, alongside other signs of labour market resilience.

Given the backdrop, traders had priced in a 95% chance of a quarter-percentage-point rate hike by the Bank of England in the November 5 meeting.

BoE interest rate probabilities - Source: Prime Terminal

Attention now turns to British Finance Minister John Healey's first budget, due next week. Earlier this month, Healey said his budget would bolster Britain's resilience to the Iran war’s energy-price shock and give the country "a bit of breathing space."

GBP/USD Price Forecast: Technical outlook

Chart Analysis GBP/USD
GBP/USD daily chart

In the daily chart, GBP/USD trades at 1.3387, holding a bearish near-term bias as it remains capped beneath the latest triple simple moving average at 1.3409 and the downward resistance trend line break at 1.3405. The pair trades under a broader cluster of structural barriers defined by the upward support trend line breaks at 1.3620 and 1.3805, while the Relative Strength Index (14) around 57 suggests recovering but still moderate bullish momentum that has yet to overcome the overhead supply.

On the topside, initial resistance is seen at the downward resistance trend line break near 1.3405, followed closely by the triple simple moving average at 1.3409; a daily close above this band would open the way toward the next resistance zone at the upward trend line break around 1.3620, ahead of 1.3805. On the downside, the former downward resistance trend line break at 1.3271 now acts as immediate support, and a move back below this level would reinforce the broader bearish tone and expose lower levels in the coming sessions.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

Pound Sterling Price Today

The table below shows the percentage change of British Pound (GBP) against listed major currencies today. British Pound was the strongest against the Euro.

USD EUR GBP JPY CAD AUD NZD CHF
USD 0.12% -0.01% -0.02% 0.07% -0.41% -0.10% 0.12%
EUR -0.12% -0.22% -0.16% -0.09% -0.48% -0.27% -0.05%
GBP 0.01% 0.22% 0.04% 0.11% -0.27% -0.07% 0.16%
JPY 0.02% 0.16% -0.04% 0.09% -0.29% -0.10% 0.13%
CAD -0.07% 0.09% -0.11% -0.09% -0.39% -0.17% 0.04%
AUD 0.41% 0.48% 0.27% 0.29% 0.39% 0.22% 0.42%
NZD 0.10% 0.27% 0.07% 0.10% 0.17% -0.22% 0.23%
CHF -0.12% 0.05% -0.16% -0.13% -0.04% -0.42% -0.23%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).

Disclaimer: For information purposes only. Past performance is not indicative of future results.
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