Hot US CPI and hawkish Fed rhetoric send British Pound tumbling below 1.33

• Mounting selling pressure sends GBP/USD down 0.55% below 1.3300.
• With US core CPI steady at 0.3% MoM, expectations of a Fed rate rise strengthen.
• Ahead of Thursday's UK GDP release, US 10-year Treasury yields hit 5%.

Tuesday's strong US inflation report and hawkish remarks from Federal Reserve (Fed) officials weigh on sterling against the US dollar on Wednesday as traders assess their implications. GBP/USD is trading below the psychological 1.3300 level at the time of writing, a decline of 0.55%.

GBP/USD falls further below 1.3300 as UK GDP and US PPI come into focus

Monthly growth in the Consumer Price Index (CPI) eased from 0.6% to 0.4% MoM, the US Bureau of Labour Statistics (BLS) reported on Tuesday. Although above forecasts, the reading indicated that disinflation was continuing. Fed Governor Christopher Waller, however, had signalled an intention to raise rates by 50 basis points if core CPI came in at 0.3%. That condition was met: underlying inflation registered 0.3% MoM for a third consecutive month, exceeding the 0.2% estimate.

The figures prompted market participants to buy the US dollar, with higher US Treasury yields providing additional support. Following a rise of nearly 12 basis points on Tuesday, the 10-year T-note yield stands at 5%. Meanwhile, the CME FedWatch Tool showed that markets had fully priced in a 25-basis-point rate rise.

Hawkish remarks also came from other Fed officials, including Dallas Fed's Lorie Logan and Philadelphia Fed's Anna Paulson. According to Logan, it may be possible to raise rates “more rapidly this winter,” while Paulson said that the “Fed will move more aggressively if inflation landscape worsens.”

A more moderate stance came from Fed Governor Michelle Bowman and Kansas City Fed President Jeffrey Schmid. Bowman said persistent inflation indicated that further work remained, while Schmid highlighted concerning price trends even when the entire energy picture was excluded.

With little on the UK economic calendar, investors are preparing for Thursday's Gross Domestic Product (GDP) figures. Across the Atlantic, attention turns to jobless claims and housing data before Friday's Producer Price Index (PPI) release.

GBP/USD Price Forecast: Resistance keeps the technical outlook bearish

Trading at 1.3282 on the daily chart, GBP/USD remains below a concentrated area of medium-term resistance, preserving a bearish near-term outlook. Around 1.3352, the latest readings of the 50-, 100- and 200-day simple moving averages (SMAs) lie well above the current price. This suggests that rebounds will remain constrained while the pair stays below that cluster. Above the market, two falling resistance trend lines originating at 1.3869 and 1.3653 further suggest that trading remains within a broader corrective channel. The 14-period Relative Strength Index, at 43.6, supports this cautious assessment: buying interest remains muted, allowing room for another corrective decline should sellers regain control.

The nearer descending trend line, projected from 1.3653, provides the first resistance on any advance. A break above it would bring the higher falling trend line drawn from 1.3869 into view, followed by the convergence of the 50/100/200-day SMAs near 1.3352. For support, the first rising trend line, originating at 1.3159, is expected to provide an immediate floor, followed by a second upward-sloping line anchored at 1.3140. A daily close beneath these structural support levels would likely indicate an extension of the broader bearish move.

(The technical analysis of this story was written with the help of an AI tool. Know more.)