GBP/USD Price Forecast: Is a fresh upward move unfolding above 1.3410?

GBP/USD advances towards 1.3395 as expectations of a hawkish BoE lift the British Pound.
An interest rate increase at the BoE’s November policy meeting is viewed as almost certain.
September inflation in the UK accelerated beyond expectations.

Support for the British Pound (GBP) lifts it 0.1% to around 1.3395 against the US Dollar (USD) in Wednesday’s European trading session. Behind the advance is September’s stronger-than-forecast United Kingdom (UK) Consumer Price Index (CPI) report, which has fuelled expectations of a hawkish Bank of England (BoE).

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

Figures published earlier in the day by the Office for National Statistics (ONS) showed headline CPI rising 3.5% year-on-year (YoY), exceeding both the 3.4% forecast and August’s 3.1% reading. Excluding the volatile food, energy, alcohol and tobacco components, core CPI increased 2.8% YoY, also above the projected 2.7% and the previous reading of 2.6%.

Are multiple UK rate hikes firmly on the BoE’s policy path?

With little room for a change in the near-term policy course, analysts at Societe Generale say that “for the BoE, a 25bp increase bank rate in November is locked in.” In their assessment, money markets are factoring in a longer tightening cycle and are “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 next draw investors’ attention, with September UK Retail Sales figures and October’s flash S&P Global PMI readings on the calendar.

Pressure on the US Dollar, meanwhile, reflects concerns surrounding optimism over 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 Analysis: Is There Scope for Further Gains?

A constructive near-term outlook remains in place on the daily chart, where GBP/USD trades at 1.3391, above its 20-period exponential moving average (EMA) of 1.3303. The pair is extending its rebound from recent lows. At 57.5, the Relative Strength Index (RSI) points towards bullish momentum but has not yet reached overbought territory. This suggests scope for additional gains as long as the reclaimed short-term trend baseline continues to provide support.

A decisive move above 1.3410 could open the way for another leg higher. 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 in Focus

What Does the Consumer Price Index (YoY) Measure?

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

Find out more.

Latest release: Wed 21 October 2026 06:00

Release frequency: Monthly

Actual reading: 3.5%

Consensus estimate: 3.4%

Previous reading: 3.1%

Data source: Office for National Statistics

Why Is This Release Important for Traders?

A reading above expectations tends to support GBP. The monthly release is significant because the Bank of England has a mandate to keep inflation, measured by the headline Consumer Price Index (CPI), at around 2%. Rising inflation points to earlier and faster interest rate increases or a reduction in bond purchases by the BOE, thereby tightening the supply of pounds. Slower price growth, by contrast, signals a looser monetary policy stance.