US inflation surprise steadies pound sterling to US dollar exchange rate as buyers defend support

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Pound Sterling vs Dollar drops 0.54%

Highlights

US inflation data for October exceeded projections, leading markets to fully price in a 25-basis-point rate increase for December.
Hawkish Federal Reserve commentary and stronger US Dollar demand have only partially been offset by Bank of England support for Sterling.
GBP/USD trades with a bearish bias below key moving averages, with signals pointing to a likely range of $1.321 to $1.3342 and further downside risk.

Dollar demand surges as US inflation beats expectations

US inflation data for October exceeded expectations, leading to heightened expectations for monetary tightening and directly increasing demand for the US Dollar relative to Sterling. Hawkish commentary from Federal Reserve officials further raised the probability of a December interest rate hike, with financial markets now fully pricing in a 25-basis-point move and contemplating a possible larger increase. Although recent hawkish signals from the Bank of England have provided some support to the British Pound, according to Globalbankingandfinance, these measures have only partially offset the prevailing strength of the US Dollar.

Widespread technical resistance as momentum signals remain bearish

GBP/USD is trading below its MA-20 and MA-50, as well as the long-term MA-200, confirming ongoing short-, medium-, and long-term resistance. The Ichimoku Kijun at $1.3369 serves as immediate resistance, with momentum indicators MACD and ADX both aligned to a sell bias. RSI, Stoch RSI, and CCI are all in oversold territory, which highlights divergence from recent negative momentum signals. Bull/Bear Power is negative and confirms continued seller dominance intraday, while the Awesome Oscillator is neutral and does not currently support the prevailing downtrend.

Low upside chances as downside scenario dominates short-term outlook

Over the next two to three sessions, GBP/USD is expected to move within the $1.321 to $1.3342 range, a typical volatility band for the pair at current levels. The probability of a meaningful upside move is assessed to be very low, while further downside remains highly likely. Without a decisive break above immediate resistance, sideways price action is likely to persist; a drop below the support range would confirm a bearish acceleration. A bullish move would require a sustained rally above $1.3369.

Viktoras Karapetjanc, expert at Traders Union, sees macro and sentiment drivers keeping GBP/USD under strong pressure. The dominant force is still US monetary policy, with upside in US yields supporting the dollar. He notes that while the Bank of England’s recent tone gives Sterling some support, it is not enough to reverse the trend. Resistance remains firm and key technical indicators are not signaling reversal yet. "Unless GBP/USD breaks above $1.3369, I expect sellers to stay in control and further weakness toward $1.321 remains more likely than not."

Earlier, analysts noted that GBP/USD was under sustained pressure due to a firm US Dollar and persistent bearish technical signals. The current analysis reinforces this outlook, with renewed dollar strength and technical resistance suggesting that traders should closely monitor a potential downside break below the established volatility band for further bearish momentum.

Source of Data: GBP Price Analysis by TU

The analysis is based on a proprietary model combining technical, on-chain, and expert data. Not investment advice. See methodology

The information is based on forecasts and does not constitute investment advice or a guarantee of future results. Market conditions may change. See our Disclaimer and Editorial Integrity for details.