Above 1.3410: GBP/USD Price Forecast Points to a Fresh Leg Higher

1.3395 in sight: GBP/USD rises as hawkish BoE outlook supports British Pound.
A November interest rate increase by the BoE is viewed as almost certain.
September UK inflation accelerated beyond expectations.

A 0.1% gain puts the British Pound (GBP) near 1.3395 against the US Dollar (USD). Sterling is trading higher in Wednesday’s European session after September Consumer Price Index (CPI) figures from the United Kingdom (UK) exceeded expectations, reinforcing a hawkish outlook for the Bank of England (BoE).

Headline CPI rose 3.5% year-on-year (YoY) in September, the Office for National Statistics (ONS) reported earlier in the day. That exceeded the 3.4% forecast and August’s 3.1% reading. Excluding volatile food, energy, alcohol and tobacco prices, core CPI increased 2.8% YoY, also above the 2.7% estimate and the previous reading of 2.6%.

TMGM Analysis: Financial Market News, Economic Calendar & Market Insights

Multiple UK rate hikes priced in as BoE tightening path firms

The near-term policy course is largely set, according to analysts at Societe Generale, who say that “for the BoE, a 25bp increase bank rate in November is locked in.” Money markets also anticipate a longer tightening cycle. The analysts describe them as “aggressively priced for another three hikes by next summer to 4.75% unless the progress in inflation stalls and the economy extends its resilient performance into 2027.”

Friday’s releases will be the next focus for investors: September UK Retail Sales and October’s flash S&P Global PMI figures.

Pressure on the US Dollar, meanwhile, reflects concerns about optimism surrounding Artificial Intelligence (AI)-driven growth in the United States (US). Expectations that the Federal Reserve (Fed) will leave interest rates unchanged at its policy meeting later this month are also weighing on the currency.

GBP/USD Technical Outlook

At 1.3391 on the daily chart, GBP/USD remains above its 20-period exponential moving average (EMA) of 1.3303. That positioning supports a positive near-term outlook as the recovery from recent lows continues. A Relative Strength Index (RSI) reading of 57.5 indicates a bullish bias but not overbought conditions. Further gains therefore remain possible while the reclaimed short-term trend baseline provides support.

A decisive move above 1.3410 could open another upward leg. For corrective declines, the latest close of 1.3391 serves as a nearby pivot, while initial support lies at the 20-day EMA of 1.3303.

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

Economic Data Indicator

YoY Consumer Price Index

Published monthly by the Office for National Statistics, the United Kingdom (UK) Consumer Price Index (CPI) tracks consumer price inflation to international standards. It measures how quickly the prices of goods and services purchased by households rise or fall and is the measure used for the government’s inflation target. The YoY figure compares prices in the reference month with those a year earlier. A higher reading is generally considered bullish for the Pound Sterling (GBP); a lower reading is generally considered bearish.

Find out more.

Latest release: Wed 21 Oct 2026 06:00

Release frequency: Monthly

Reported figure: 3.5%

Market consensus: 3.4%

Prior reading: 3.1%

Data source: Office for National Statistics

Inflation’s Significance for Traders

Around 2% is the Bank of England’s inflation target. Its mandate uses the headline Consumer Price Index (CPI) as the measure, making this monthly release important. Rising inflation implies earlier, faster interest rate increases or reduced bond purchases by the BOE, constraining the supply of pounds. Slower price growth, by contrast, signals looser monetary policy. A reading above market expectations generally supports GBP.