Below 1.34: British Pound slides as hot CPI raises prospect of 50-bps Fed hike

• 1.3396 is the latest GBP/USD level. The pair loses over 0.40% as selling gathers pace.
• 0.3% MoM US Core CPI growth tops the 0.2% projection.
• 50-bps hike under consideration by Waller if Core CPI reaches 0.3% MoM.

GBP/USD trades at 1.3396. Sterling loses over 0.40% against the US Dollar on Tuesday, with US inflation signalling unfinished work for the Federal Reserve (Fed). In hawkish comments, Fed Governor Waller indicated that a 50-basis-point (bps) increase would be justified by a core CPI reading of 0.3% MoM. The data matched that forecast.

0.3% core CPI rise weighs on GBP/USD, backing Waller’s case for a bigger rate increase

October’s Core Consumer Price Index (CPI) increased 0.3% month on month, surpassing the 0.2% projection, the US Bureau of Labour Statistics (BLS) reported. At 0.4% MoM, headline CPI slowed from September’s 0.6%, yet still exceeded the 0.3% forecast.

A strong economy and stable labour market remain accompanied by excessively high inflation, according to Governor Christopher Waller. He would favour a 25 bps rate increase if October’s inflation improved. A reading similar to those of the last two months, however, would lead him to favour a 50 bps increase.

The CME FedWatch Tool put the probability of a 25 basis points rate increase at 85% following Waller’s comments, up from its earlier level. The probability of a 50 bps move stood at 14%.

October’s BRC Like-For-Like Retail Sales in the UK rose 1.1%, improving on 1% but falling short of the 1.2% forecast. Attention now turns to Thursday’s Gross Domestic Product (GDP) release. Estimates point to economic growth of 0.7% QoQ in Q3.

Thursday’s US calendar includes Initial Jobless Claims, housing figures and speeches from Fed officials.

1.3376 GBP/USD price forecast: Technical assessment

At 1.3376 on the daily chart, GBP/USD faces a near-term ceiling beneath the closely grouped 50-, 100- and 200-day simple moving averages (SMAs) around 1.3453–1.3457. Just below the price lies a descending trend-line support zone near 1.3375–1.3226. This positioning points to consolidation within a wider corrective downtrend. Meanwhile, the Relative Strength Index (14), at around 51, indicates neutral momentum that is stabilising, rather than a clear bullish reversal.

Resistance begins with the 200-day SMA near 1.3453. The 100-day SMA at 1.3455 and the 50-day SMA at 1.3457 follow closely. Only a sustained break through this cluster would relieve the current ceiling and clear a path towards the higher ascending trend-line barriers near 1.3700 and 1.3868. Support immediately below the market comes from the descending trend line at 1.3375, followed by the lower trend-line floor around 1.3226. A decisive break beneath that next key level would strengthen the bearish bias and leave the pair vulnerable to further losses.

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