GBP/USD tumbles under 1.3400 as soft CPI all but guarantees BoE easing

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GBP/USD drops below 1.3400 on Wednesday as the latest inflation report in the United Kingdom (UK) dipped sharply ahead of the Bank of England’s (BoE) monetary policy decision on Thursday. At the time of writing, the pair hovers around 1.3350, down 0.48%.

GBP/USD drops as UK CPI falls sharply, with expectations for a BoE rate cut justified.
Markets fully price a 25-bps BoE cut to 3.75% on Thursday.
US Dollar firms as Fed officials sound cautious, shifting focus to US CPI and jobless claims data.

Sterling tumbles as November CPI undershoots forecasts

The US economic docket remains scarce, with Fed officials crossing the wires. Governor Christopher Waller —who would be interviewed by the US President Donald Trump for the top Fed Chair job — said that rate cuts have positively impacted the employment sector. He added that “inflation is unlikely to pick up again,” and that rates are 50 to 100 bps above neutral levels, but there’s no need for immediate rate cuts.

In the meantime, UK Consumer Price Index (CPI) in November dipped from 0.4% MoM to -0.2% below estimates of 0%. On an annual basis, CPI fell from 3.6% to 3.2%, missing forecasts for a drop to 3.5%.

After the data, market participants had fully priced in a BoE rate cut on Thursday, which would leave the Bank Rate at 3.75% towards the end of the year. For 2026, investors had priced in 65 bps of cuts.

The US economic docket will feature the release of the US CPI on Thursday, along with Initial Jobless Claims data for the week ending on December 13, with estimates suggesting that 225K Americans filed for unemployment benefits.

GBP/USD Price Forecast: Technical outlook

The GBP/USD upward-to-neutral bias remains intact, but inflation data prompted investors to push the pair towards a daily low of 1.3311 before trimming some of those losses. Although momentum in the short-term turned slightly bearish, the Relative Strength Index (RSI) remains bullish, an indication that further upside is seen.

If GBP/USD ends the day above 1.3400, expect some sideways price action ahead of the BoE’s decision. On the flip side, if the pair tumbles below the latter, it could fall towards the 200-day SMA at 1.3345, followed by the 1.3300 figure.

Pound Sterling Price This week

The table below shows the percentage change of British Pound (GBP) against listed major currencies this week. British Pound was the strongest against the Australian Dollar.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		-0.09%	-0.02%	-0.26%	0.08%	0.52%	0.28%	-0.23%
EUR	0.09%		0.09%	-0.18%	0.16%	0.64%	0.37%	-0.13%
GBP	0.02%	-0.09%		-0.17%	0.09%	0.56%	0.29%	-0.21%
JPY	0.26%	0.18%	0.17%		0.34%	0.80%	0.53%	0.25%
CAD	-0.08%	-0.16%	-0.09%	-0.34%		0.46%	0.20%	-0.16%
AUD	-0.52%	-0.64%	-0.56%	-0.80%	-0.46%		-0.26%	-0.76%
NZD	-0.28%	-0.37%	-0.29%	-0.53%	-0.20%	0.26%		-0.51%
CHF	0.23%	0.13%	0.21%	-0.25%	0.16%	0.76%	0.51%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).

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