GBP/USD rises as Fed rate cut odds boost Sterling
- GBP/USD climbs above key moving averages, signaling potential for further gains.
- US inflation data and consumer sentiment support expectations for a Fed rate cut next week.
- Bank of England expected to lower rates, easing cost-of-living pressures in December.
GBP/USD resumes its uptrend on Friday, trimming some of Thursday’s 0.21% losses as the Greenback recovered some ground. Inflation data in the US kept steady the chances for a Fed cut in the December meeting, weighing on the Dollar. At the time of writing, the pair trades at 1.3349 up 0.19%.
GBP/USD rallies as US Core PCE reaffirms Fed rate cut in December
The Core Personal Consumption Expenditures (PCE) Price Index, the Fed’s favorite inflation gauge which excludes food and energy, rose by 0.2% MoM in September, unchanged from August and aligned with estimates. In the twelve months to September ticked lower as expected from 2.9% to 2.8%.
At the same time, the University of Michigan Consumer Sentiment in December stood at 53.3 above estimates of 52.0 up from November’s final reading of 51.1. Joanne Hsu the Director of the Surveys of Consumer noted that “consumers see modest improvements from November on a few dimensions, but the overall tenor of views is broadly somber.”
American’s inflation expectations for one year in December dipped from 4.5% to 4.1%. For a five-year period, it decreased from 3.4% in November to 3.2%.
Given the backdrop, expectations for a 25 basis points (bps) Fed rate cut next week remained unchanged at 84% revealed Capital Edge Rate Expectations Overview data.
After the data, the GBP/USD bounced towards 1.3350 after meandering around 1.3340 as the US Dollar tumbles to expectations of further easing.
In a note, Morgan Stanley revealed that they expect a 25-bps cut in December, and in January and April of 2026. They expect the Fed funds rate to end at 3%-3.25%.
The British Pound shrugged off worries about last month’s budget, while business activity showed some improvement, revealed S&P Global.
Despite this, the Bank of England is projected to reduce costs of living by 25 bps to 3.75% in the December 18 meeting after pausing its easing cycle in November.
GBP/USD Price Forecast: Technical outlook
The GBP/USD seems capped by the 100-day Simple Moving Average (SMA) at 1.3365, even though the pair crossed above the 200-day SMA at 1.3326. Therefore, further consolidation lies ahead and with the Fed next meeting looming, a breach of the 100-day SMA is likely.
In that outcome, the next key resistance is 1.3400. Once surpassed the next stop would be the October 17 high at 1.3471 ahead of 1.3500. On the flip side, GBP/USD’s drop below 1.3300, exposes the 50-day SMA at 1.3264, followed by 1.3200.
Pound Sterling Price This week
The table below shows the percentage change of British Pound (GBP) against listed major currencies this week. British Pound was the strongest against the Swiss Franc.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.42% | -0.77% | -0.54% | -0.89% | -1.39% | -0.79% | 0.12% | |
| EUR | 0.42% | -0.35% | -0.11% | -0.47% | -0.98% | -0.37% | 0.54% | |
| GBP | 0.77% | 0.35% | 0.50% | -0.12% | -0.63% | -0.03% | 0.90% | |
| JPY | 0.54% | 0.11% | -0.50% | -0.35% | -0.87% | -0.26% | 0.65% | |
| CAD | 0.89% | 0.47% | 0.12% | 0.35% | -0.56% | 0.10% | 1.01% | |
| AUD | 1.39% | 0.98% | 0.63% | 0.87% | 0.56% | 0.61% | 1.53% | |
| NZD | 0.79% | 0.37% | 0.03% | 0.26% | -0.10% | -0.61% | 0.92% | |
| CHF | -0.12% | -0.54% | -0.90% | -0.65% | -1.01% | -1.53% | -0.92% |
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).
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