GBP/USD price for today: The pair declines following weak UK inflation data
GBP/USD price for today: The pair declines following weak UK inflation data
The British Pound Sterling (GBP) dropped sharply against the US Dollar following the release of the latest UK Consumer Price Index (CPI) data, which indicated a faster-than-expected slowdown in inflation.
The Office for National Statistics (ONS) reported that the annual inflation rate in September fell to 1.7%, below market expectations of 1.9% and down significantly from 2.2% in August. Core CPI growth, which excludes volatile items like food and energy, slowed to 3.2%, under the anticipated 3.4% and lower than the previous 3.6%. These figures suggest that inflationary pressures are easing, raising expectations for a potential interest rate cut by the Bank of England (BoE) before the year ends.
Financial markets are now forecasting a 25 basis-point rate cut at one of the BoE’s final two policy meetings for 2024, scheduled for November and December.
Meanwhile, recent wage data showed that the growth in average UK earnings (excluding bonuses) was 4.9% for the three months ending in August, marking the slowest pace of increase in two years.
During Wednesday’s trading session, the Pound fell to the psychological support level of 1.3000 against the US Dollar (USD). The USD, meanwhile, remains buoyant near multi-month highs, supported by expectations for a restrained pace of rate cuts by the Federal Reserve (Fed) at upcoming meetings in November and December.
The US Dollar also received additional support from strong Nonfarm Payrolls and ISM Services PMI reports, which have eased recession fears in the world’s largest economy.
Technically, the GBP/USD pair remains under pressure, with the next key support for the Pound around 1.2840, while 1.3100 serves as a potential resistance level if the British currency attempts a recovery.
At the time of writing, the GBP/USD pair is trading at 1.2999, down 0.56% in the last 24 hours.
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