3.7% US inflation sends the Pound to an 11-month low

• GBP/USD dips under 1.3150, an 11-month low, then climbs back near 1.3200.
• US prices rise 3.7% on the year, and Treasury yields jump before reversing.
• UK August GDP is forecast to contract, and BoE Governor Bailey speaks Friday.

Hotter US inflation figures knocked GBP/USD to its lowest since late November 2025, and the pair is back near 1.3200, the floor of its range since late September. It dropped from just above 1.3250 on the release to just under 1.3150 at the low, and has recovered about two-fifths of that since.

US consumer prices were up 3.7% on the year in September against a 3.6% forecast, and the 10-year Treasury yield jumped from about 5.19% to about 5.33% on the release. The yield has since come back to about 5.20%, but the Pound has lost more against the Dollar than any other major currency on Wednesday.

Bank of England (BoE) Chief Economist Pill voted with external members Greene and Mann in September to raise the UK's Bank Rate from 3.75%. On Wednesday he said he's a bit sceptical of the four hikes markets price over the next year, which leaves traders expecting more from the BoE than one of its keenest advocates of a hike does. The UK side of the rate gap GBP/USD follows was being talked down before the US release pushed the other side up.

On the calendar

The UK's Gross Domestic Product (GDP) figure for August, due on Thursday, is forecast to show a 0.1% contraction after 0.4% growth in July, with factory output forecast down 0.1% after a 0.9% rise. Chief Economist Pill speaks again on Thursday and BoE Governor Bailey on Friday, ahead of the November 5 decision. A shrinking economy would make the four hikes in market prices harder to defend.

US retail sales, due on Thursday with producer prices and weekly jobless claims, are forecast to rise 0.3% in September after a 1.2% jump, and Fed Chair Warsh is due to speak on Friday. Traders already put a December Fed hike near 95%, so the US figures bear mostly on whether it arrives on October 28 instead.

On the charts

Wednesday's low went just under the late-June low, where the climb to the August 21 high just under 1.3700 began, so GBP/USD has given back that whole rally. The pair has traded beneath both its 50-day Exponential Moving Average (EMA), now near 1.3350, and its 200-day EMA, short of 1.3400, since September 17, and both averages are falling.

GBP/USD daily chart