British Pound stays near one-week low with 1.3300 in focus as Fed hike bets support USD

Hot US CPI data sustains the USD’s advance, bringing renewed selling pressure to GBP/USD.
Expectations of a jumbo December rate rise strengthen after comments from the Fed’s Waller, lending further support to the USD.
Losses in the currency pair could be contained as the BoE’s hawkish outlook lends support to the GBP.

With hot US consumer inflation data supporting the dollar, GBP/USD reverses an intraday rise towards 1.3355 on Wednesday to trade lower for a second consecutive day. The pair moves back towards the one-and-a-half-week low reached the day before. Nevertheless, conflicting influences keep spot prices above 1.3300, suggesting caution for traders considering aggressive bearish positions.

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

Expectations of more forceful tightening by the Federal Reserve (Fed) are strengthening, extending the US Dollar’s (USD) inflation-driven advance to its highest level in nearly a week and weighing on GBP/USD. Following hawkish remarks on Tuesday from Fed Governor Christopher Waller, traders have also begun to price in the possibility of a jumbo interest rate rise in December.

The dollar draws additional support from a persistent geopolitical risk premium, with the US-Iran stand-off and ongoing attacks on tankers in the Strait of Hormuz keeping tensions elevated. Even so, investors continue to hope for a diplomatic breakthrough that could end the US-Iran war. Such a development could weigh on the USD and curb further losses in GBP/USD.

Sterling (GBP) could also find support in the Bank of England’s (BoE) hawkish position. Speaking on Tuesday, BoE Deputy Governor Clare Lombardelli said that high energy prices and the resilience of the UK economy mean further interest rate rises remain likely. A decisive break below 1.3300 is therefore required to confirm that the recent GBP/USD advance has lost momentum.

US Dollar Leads Against Canadian Dollar Over Last 7 Days

Over the last 7 days, the US Dollar (USD) recorded its strongest performance against the Canadian Dollar. Its percentage changes against the other major currencies listed are set out in the table below.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		0.39%	0.68%	0.10%	1.47%	1.34%	0.25%	0.88%
EUR	-0.39%		0.30%	-0.28%	1.08%	0.95%	-0.14%	0.49%
GBP	-0.68%	-0.30%		-0.57%	0.78%	0.66%	-0.40%	0.19%
JPY	-0.10%	0.28%	0.57%		1.37%	1.24%	0.15%	0.78%
CAD	-1.47%	-1.08%	-0.78%	-1.37%		-0.13%	-1.20%	-0.58%
AUD	-1.34%	-0.95%	-0.66%	-1.24%	0.13%		-1.07%	-0.45%
NZD	-0.25%	0.14%	0.40%	-0.15%	1.20%	1.07%		0.63%
CHF	-0.88%	-0.49%	-0.19%	-0.78%	0.58%	0.45%	-0.63%

Percentage changes between the major currencies are displayed in the heat map. To read a currency pair, select its base currency in the left-hand column and its quote currency in the top row. Selecting the US Dollar on the left and following that row across to the Japanese Yen, for instance, gives the percentage change for USD (base)/JPY (quote) in the intersecting cell.