- The Pound Sterling declines against key currencies following the release of November’s UK inflation data, which aligned with forecasts
- This inflation report reinforces expectations that the Bank of England will maintain its interest rate at 4.75% on Thursday.
- Meanwhile, the Federal Reserve is anticipated to lower interest rates by 25 basis points to a range of 4.25%-4.50%.
The Pound Sterling (GBP) weakened against its major counterparts on Wednesday following the release of the UK’s Consumer Price Index (CPI) data for November, which indicated that inflation increased in line with expectations. The report revealed that annual headline inflation rose to 2.6% year-on-year, matching forecasts and up from 2.3% in October.
On a monthly basis, headline inflation grew by 0.1%, also in line with predictions, though slowing from the 0.6% rise recorded in October.
Core CPI, which excludes volatile categories like food, energy, oil, and tobacco, increased by 3.5%. This was slightly below the forecast of 3.6% but higher than the previous reading of 3.3%. Services inflation, a key metric closely monitored by Bank of England (BoE) officials, remained steady at 5%.
The inflation data reinforces expectations that the BoE will keep interest rates unchanged at 4.75% during its Thursday policy meeting, with an 8-1 vote anticipated. BoE Monetary Policy Committee (MPC) member Swati Dhingra is likely to advocate for a 25-basis-point rate cut to 4.5%.
Investors will be keen to follow BoE Governor Andrew Bailey’s press conference for signals on potential policy easing in 2025.
Looking ahead, market participants will also pay attention to the UK November retail sales data, set for release on Friday.
British Pound Rate Today
The table below displays the percentage change of the British Pound (GBP) against major listed currencies. Today, the British Pound showed the most strength against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.05% | 0.19% | 0.08% | 0.06% | 0.33% | 0.35% | 0.13% | |
| EUR | 0.05% | 0.24% | 0.13% | 0.11% | 0.38% | 0.39% | 0.18% | |
| GBP | -0.19% | -0.24% | -0.12% | -0.12% | 0.14% | 0.16% | -0.06% | |
| JPY | -0.08% | -0.13% | 0.12% | -0.03% | 0.24% | 0.24% | 0.04% | |
| CAD | -0.06% | -0.11% | 0.12% | 0.03% | 0.27% | 0.28% | 0.07% | |
| AUD | -0.33% | -0.38% | -0.14% | -0.24% | -0.27% | 0.01% | -0.20% | |
| NZD | -0.35% | -0.39% | -0.16% | -0.24% | -0.28% | -0.01% | -0.21% | |
| CHF | -0.13% | -0.18% | 0.06% | -0.04% | -0.07% | 0.20% | 0.21% |
Daily Market Movers Digest: Pound Sterling Steadies Ahead of Fed Policy Decision
- The Pound Sterling remains broadly sideways against the US Dollar (USD) around 1.2700 in Wednesday’s London session. The US Dollar consolidates ahead of the Federal Reserve’s (Fed) monetary policy announcement at 19:00 GMT. According to the CME FedWatch tool, traders have priced in a 25-bps interest-rate reduction, which would be the third consecutive interest rate cut.
- With market participants expecting a cut, investors will pay close attention to the Federal Open Market Committee (FOMC) Economic Projections and the dot plot, which shows where policymakers see the federa funds rate heading in the medium and longer term.
- A majority of economists expect a less dovish Fed for 2025, according to a recent Bloomberg survey. Economists see the Fed reducing interest rates three times next year as inflation remains above the Fed’s target. The survey also indicated that economists have become more worried about upside risks to inflation with incoming President-elect Donald Trump’s policies, which include mass deportations, higher import tariffs, and tax cuts.
Technical Analysis: Pound Sterling Maintains Support Along Upward Trendline Around 1.2600
The Pound Sterling hovers around the 20-day Exponential Moving Average (EMA) at approximately 1.2815 against the US Dollar (USD). The GBP/USD pair bounced back near the upward-sloping trendline around 1.2600, which originates from the October 2023 low of around 1.2035.
The 14-day Relative Strength Index (RSI) fluctuates between 40.00 and 60.00, indicating a neutral or sideways movement.
To the downside, the pair is likely to find support near the psychological level of 1.2500, while the 200-day EMA around 1.2710 is expected to act as key resistance on the upside.
