Below 1.33: British Pound slumps after hot US CPI and hawkish Fed rhetoric

• 0.55% lower: GBP/USD falls below 1.3300 as selling pressure builds.
• At 0.3% MoM, unchanged US Core CPI strengthens expectations of a Fed rate rise.
• 5% reached by US 10-year Treasury yields before Thursday's UK GDP release.

GBP/USD is down 0.55% at the time of writing. The pair trades below the psychological 1.3300 level as the Pound Sterling weakens against the US Dollar on Wednesday. Traders are weighing hawkish remarks from Federal Reserve (Fed) officials alongside Tuesday's hot US inflation report.

Below 1.3300: GBP/USD losses deepen ahead of UK GDP and US PPI

Monthly Consumer Price Index (CPI) inflation eased to 0.4% from 0.6%, Tuesday's US Bureau of Labour Statistics (BLS) report showed. The reading exceeded forecasts while indicating that disinflation was continuing. Underlying inflation, however, held at 0.3% MoM for the third consecutive month, above the 0.2% estimate. That met the condition outlined by Fed Governor Christopher Waller, whose comments indicated an intention to raise rates by 50 basis points if core CPI came in at 0.3%.

US Dollar buying followed, supported in part by higher US Treasury yields. After climbing nearly 12 basis points on Tuesday, the 10-year T-note yield stands at 5%. According to the CME FedWatch Tool, market participants had fully priced in a 25-basis-point rate increase.

Hawkish remarks also came from Dallas Fed Lorie Logan and Philadelphia’s Fed Anna Paulson. A faster pace of rate increases may be possible, Logan said, using the words “more rapidly this winter,” while Paulson warned that the “Fed will move more aggressively if inflation landscape worsens.”

More moderate views came from Fed Governor Michelle Bowman and Kansas City Fed President Jeffrey Schmid. Persistent inflation indicates that further work is needed, Bowman said. Schmid highlighted worrying price trends beyond the overall energy picture.

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

1.3282: GBP/USD Price Forecast and technical assessment

At 1.3282 on the daily chart, GBP/USD retains a bearish short-term bias below a concentrated area of medium-term resistance. Around 1.3352, the latest 50-, 100- and 200-day simple moving average (SMA) readings remain well above spot. This suggests that rebounds are likely to face a ceiling while the pair stays below the cluster. Overhead resistance also comes from two falling trend lines originating at 1.3869 and 1.3653, consistent with trading within a broader corrective channel. With the 14-period Relative Strength Index at 43.6, momentum supports a cautious view. Buying interest remains muted, allowing room for another corrective decline if sellers retake control.

The nearer descending trend line, projected from 1.3653, provides the first upside barrier. A break would bring the higher falling trend line from 1.3869 into focus, followed by the converging 50/100/200-day SMAs near 1.3352. Initial downside support is expected at the first rising trend line originating at 1.3159. A second ascending support line anchored at 1.3140 lies beyond it. A daily close beneath these structural supports would likely indicate that sellers are extending the broader downturn.

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