British Pound near one-week low: Is 1.3300 next as Fed hike bets strengthen USD?

Fresh selling weighs on GBP/USD as the USD extends gains driven by elevated US CPI.
Expectations of a jumbo December rate hike strengthen after Fed’s Waller comments, giving the USD an additional lift.
Losses in the pair could be contained if the BoE’s hawkish outlook lends support to the GBP.

Selling pressure returns to GBP/USD for a second consecutive day, taking the pair back towards the one-and-a-half-week low reached the previous day after Wednesday’s intraday rise to around 1.3355. Even so, competing influences keep spot prices above 1.3300, suggesting that traders should exercise caution before taking aggressive bearish positions.

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

Downward pressure on GBP/USD persists as the US Dollar (USD) climbs to its highest level in nearly one week. The rally, sparked by elevated US consumer inflation, is being sustained by growing expectations of more aggressive tightening by the Federal Reserve (Fed). Following hawkish remarks on Tuesday from Fed Governor Christopher Waller, traders have also begun factoring in the possibility of a jumbo rate hike in December.

The Greenback is also drawing support from a persistent geopolitical risk premium, with the US-Iran standoff and ongoing tanker attacks in the Strait of Hormuz keeping tensions elevated. Nevertheless, investors continue to hope for a diplomatic breakthrough that could end the US-Iran war. Such prospects could restrain the USD and limit additional declines in GBP/USD.

Support for the British Pound (GBP) could also come from the Bank of England’s (BoE) hawkish policy stance. Speaking on Tuesday, BoE Deputy Governor Clare Lombardelli said that high energy prices and the resilience of the UK economy mean further interest rate increases remain likely. Against this backdrop, confirmation that GBP/USD’s recent advance has lost momentum would require a decisive break below 1.3300.

How Has The US Dollar Performed Over The Last 7 Days?

The US Dollar recorded its strongest performance against the Canadian Dollar over the last 7 days. The table below sets out the percentage changes in the US Dollar (USD) against the major currencies listed.

	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%

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