GBP/USD Price Forecast: Begins a fresh advance above 1.3410

• Hawkish BoE expectations lift British Pound, taking GBP/USD towards 1.3395.
• A November interest rate rise from the BoE is now almost certain.
• September inflation in the UK accelerated more sharply than forecast.

September’s stronger-than-expected United Kingdom (UK) Consumer Price Index (CPI) figures have fuelled expectations of a hawkish Bank of England (BoE), supporting the British Pound (GBP). During Wednesday’s European trading session, sterling is up 0.1% against the US Dollar (USD), trading at around 1.3395.

Figures published earlier in the day by the Office for National Statistics (ONS) showed headline CPI rising 3.5% year on year (YoY), above the 3.4% forecast and August’s 3.1% reading. Excluding the volatile food, energy, alcohol and tobacco components, core CPI increased by 2.8% YoY, also exceeding expectations of 2.7% and the previous reading of 2.6%.

Markets price in multiple UK rate rises as BoE tightening path firms

With “for the BoE, a 25bp increase bank rate in November is locked in.”, analysts at Societe Generale view the near-term policy course as largely settled. They also point to money markets pricing in a longer tightening cycle, describing them as “aggressively priced for another three hikes by next summer to 4.75% unless the progress in inflation stalls and the economy extends its resilient performance into 2027.”

Friday’s releases will be the next focus for investors: UK Retail Sales figures for September and the preliminary S&P Global PMI readings for October.

At the same time, concerns surrounding optimism about Artificial Intelligence (AI)-driven growth in the United States (US) are weighing on the US Dollar. Expectations that the Federal Reserve (Fed) will leave interest rates unchanged at its policy meeting later this month are also putting the currency under pressure.

GBP/USD Holds Above Short-Term Trend Support

On the daily chart, GBP/USD stands at 1.3391, above its 20-period exponential moving average (EMA) of 1.3303. That position maintains a constructive near-term bias as the recovery from recent lows continues. At 57.5, the Relative Strength Index (RSI) favours the bulls but does not yet indicate overbought conditions. This suggests scope for additional gains while the pair retains support from the short-term trend baseline it has regained.

A decisive move above 1.3410 could open the way for a fresh leg higher. If the pair pulls back, the latest close of 1.3391 provides a nearby pivot, while initial downside support lies at the 20-day EMA of 1.3303.

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