British Pound holds steady below 1.3450 as markets await US CPI data

• At around 1.3445, GBP/USD trades little changed early in Tuesday’s Asian session.
• A December Fed rate rise carries an 84.0% probability in traders’ expectations.
• Upside risks to inflation continue to concern BoE’s Bailey.

With US Consumer Price Index (CPI) inflation figures due later on Tuesday, traders are holding back, leaving GBP/USD broadly unchanged around 1.3445 in early Asian trading. Bank of England (BoE) policymaker Sarah Breeden is also scheduled to speak.

Expectations that the US Federal Reserve (Fed) could leave interest rates elevated for longer have strengthened following better-than-forecast US Nonfarm Payrolls (NFP) figures. The US dollar could consequently find support in the near term.

According to the CME FedWatch tool, markets now assign nearly an 84.0% probability to a December Fed rate increase, compared with 72.8% ahead of the US employment report.

Attention later on Tuesday turns to the US CPI inflation release. Forecasts point to a 0.3% MoM increase in headline CPI for October, while core CPI, which strips out volatile food and energy costs, is expected to rise by 0.2%.

An annual October CPI figure will be absent from the report. The government shutdown a year earlier stopped the BLS from gathering some of the data needed to compile a complete index level.

A 25 basis point (bps) increase last week took the BoE’s benchmark interest rate to 4.00%, its first rise in over three years. In discussing future rate decisions, BoE Governor Andrew Bailey highlighted the Middle East war and the resulting increase in energy prices as the principal consideration. Market pricing implies three further rises by the end of next year, exceeding the expectations of most economists.

UK rates hold steady ahead of Bailey and 3 key data points

With investors awaiting policy signals, Societe Generale strategists describe a steady opening for the UK rates market: "10y IRS opens unchanged at 4.70% after holding 4.69% (100dma) last week." Their near-term technical range is defined by "support 4.58%, resistance 4.78%," while attention also rests on Governor Bailey. The bank notes that he "speaks in Zurich later today, first intervention since the MPC rate increase week," an appearance that could influence expectations of how the BoE responds to economic developments.

Among domestic releases, Societe Generale singles out "prel 3Q GDP on Thursday" and gives its own projection as "SG forecast 0.7% qoq." The bank also points to a crowded international schedule in the "week ahead," listing "US CPI, PPI, Fed speak incl Waller and Williams. EU 3Q GDP second read. UK prel 3Q GDP. China trade balance. CPI for Mexico, Norway, Czech Republic, Hungary, India," a succession of releases with potential implications for global interest rate and foreign exchange markets.

BoE’s Pill signals scope for 2026 rate cuts amid greater outlook uncertainty

At 4.2/10 on FXS Speechtracker, Pill’s latest comments sit well below the historical baseline of 6.4/10, indicating a softer tone and less conviction. His insistence that “nothing is baked in” for next year, alongside the assertion that there is “no preset upward path” for rates from spring, represents a dovish departure from earlier guidance that more firmly favoured maintaining restrictive policy.

A more growth-sensitive, data-dependent approach is evident in the explicit recognition that Bank Rate could remain unchanged, or even decline if growth stalls, with pressure on companies’ margins the decisive factor. For GBP, greater uncertainty combined with a willingness to consider cuts leaves risks skewed towards weakness. It encourages markets to scale back expectations of a sustained tightening bias and pay closer attention to scenarios involving weaker growth.

Technical Analysis: GBP/USD retains a bullish bias above the 100-day SMA

Trading above both the 100-day simple moving average (SMA) and the middle Bollinger band, GBP/USD retains a mildly bullish daily-chart outlook, pointing to underlying buying interest on limited pullbacks. As the price consolidates just beneath the upper Bollinger band, the Relative Strength Index (RSI) remains positive at roughly 57, suggesting upward momentum is still favourable.

The upper Bollinger band, near 1.3500, provides the first resistance level; a decisive move through it would create scope for a more pronounced advance. Initial downside support lies around 1.3400 at the 100-day SMA, ahead of the middle Bollinger band near 1.3370. Should the current bullish structure break down, the lower band around 1.3238 provides a deeper area of support.

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