GBP/USD sees a minor drop on Wednesday as inflation in the United Kingdom fell in October, increasing the chances of an interest rate cut by the Bank of England in December. At present, the pair is valued at 1.3120, after reaching a high of 1.3155 earlier.
GBP/USD has fallen from 1.3154 to 1.3120 as market participants brace for the potential risks linked to the Autumn Budget on November 26. The UK Consumer Price Index has dropped to 3.6%, whereas the core Consumer Price Index is at 3.4%. This development has ignited fresh hope for a possible rate reduction by the Bank of England in December. Market participants are paying close attention to the upcoming Fed minutes and Thursday’s Non-Farm Payroll report, with September job growth expected to be around 50,000. Moreover, important US economic data is scheduled to come back next week.
> Sterling weakens as CPI drops further, boosting expectations for an 85% chance of a rate cut ahead of next week’s Autumn Budget : Reports shows a decrease in the Consumer Price Index from 3.8% to 3.6% year-over-year in October, meeting expectations. Core CPI fell from 3.5% to 3.4% YoY, reaching its lowest point since March. The Pound Sterling experienced a decline as investors grew more optimistic about the possibility of the BoE lowering borrowing costs during the December meeting. The Pound could face a downturn next week as the release of Chancellor Rachel Reeves’ Autumn Budget approaches on November 26. The information shows that money markets are anticipating an 85% likelihood of a quarter-percentage-point rate cut. In the US, Initial Jobless Claims for the week ended October 18 rose by 232K, leading to a muted reaction from financial markets. Alongside traders awaiting the Fed’s last meeting minutes, there is significant attention on Thursday’s Nonfarm Payrolls figures for September, expected to be 50K, up from August’s 22K report.
The US Census Bureau has announced that it will publish the September Retail Sales and Durable Goods Orders in the week ahead. In the near future, Fed officials Governor Stephen Miran and regional Fed Presidents John Williams and Thomas Barkin are scheduled to deliver announcements. From a technical perspective, GBP/USD has reached a five-day low at 1.3092, indicating that the downtrend remains intact. The momentum suggests a downward trend as shown by the Relative Strength Index. If GBP/USD drops under 1.3100, the next support level would be the earlier cycle low of 1.3010, which was hit in early November. If buyers exceed the 20-day SMA at 1.3173, the next key resistance level to monitor would be 1.3200.