British pound is showing little movement on Wednesday. Early in the North American session, GBP/USD is trading at 1.2679, down 0.07% on the day.
UK inflation climbs to 2.6%
Inflation in the UK climbed to 2.6% in November, its highest level since March. The rise was driven by higher costs for petrol and food as well as an increase in the tobacco duty in the budget. Services inflation, which has been persistently high, was unchanged at 5%. The CPI reading was in line with the market estimate and the pound has showed almost no reaction. Monthly, CPI increased 0.1%, compared to 0.6% in October and also matching expectations.
Core inflation, which is considered a more reliable gauge of inflation trends, climbed to 3.5% y/y, up from 3.3% in October and just below the market estimate of 3.6%. This was the highest level since August. The acceleration in core inflation will be a source of concern for the Bank of England, as will be service inflation and Tuesday’s employment report which showed wage growth excluding bonuses rising to 5.2% from 4.4%.
The rise in inflation cements a pause from the BoE at Thursday’s rate meeting. The central bank has cut rates twice since June, bringing the cash rate to 4.75%. The BoE has largely contained inflation but will want to see evidence that inflation is moving towards the 2% target before delivering further rate cuts.
The BoE is widely expected to maintain the benchmark rate at 4.75% at Thursday’s rate meeting. The central bank lowered rates for a second time this year in November but will want to see inflation fall closer to the 2% target before resuming rate cuts.
The Federal Reserve makes its rate announcement later today. There isn’t much excitement around the decision, with the market pricing in a quarter-point cut at close to 100%. Investors will be interested in the updated economic and interest rate projections. President-elect Trump will take office in January which adds significant uncertainty for Fed policymakers.
GBP/USD technical
-
GBP/USD is testing support at 1.2703. Below, there is support at 1.2676.
-
1.2739 and 1.2766 and the next resistance lines.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors — not necessarily OANDA’s, its officers or directors. OANDA’s Terms of Use and Privacy Policy apply. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Recommended Content
Editors’ Picks
EUR/USD extends slide toward 1.0300, touches new two-year low
EUR/USD stays under bearish pressure and trades at its lowest level since December 2022 below 1.0350 on Thursday. The pair turned south amid a resurgent US Dollar demand and worsening market mood. Investors stay cautious at the onset of 2025, awaiting the US jobs data for fresh incentives.
GBP/USD slumps to multi-month lows below 1.2450
Following an earlier recovery attempt, GBP/USD reversed its direction and declined to its weakest level in nearly eight months below 1.2450. The renewed US Dollar (USD) strength on worsening risk mood weighs on the pair as markets await mid-tier data releases.
Gold benefits from risk aversion, climbs above $2,640
Gold gathers recovery momentum and trades at a two-week-high above $2,640 heading into the American session on Thursday. The precious metal benefits from the sour market mood and the pullback seen in the US Treasury bond yields.
XRP rockets 11% as Bitcoin starts New Year with bullish bang
Crypto majors zoomed higher in the past 24 hours as the market entered a widely expected bullish year, with Bitcoin inching above $95,000 to shake off losses from last week. XRP surged 11% to lead growth among majors as of Thursday, led by $1.3 billion worth of trading volumes on Korea-focused exchange UpBit.
Three Fundamentals: Year-end flows, Jobless Claims and ISM Manufacturing PMI stand out Premium
Money managers may adjust their portfolios ahead of the year-end. Weekly US Jobless Claims serve as the first meaningful release in 2025. The ISM Manufacturing PMI provides an initial indication ahead of Nonfarm Payrolls.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.