1.3400 remains out of reach as British Pound stalls despite hot UK CPI and BoE rate-hike bets

1.3400 remains out of reach for GBP/USD as geopolitical risks underpin the Dollar.
3.5% UK inflation reflects an acceleration led by rising energy costs.
95% probability priced for a November BoE hike before the pivotal Autumn Budget.

GBP/USD remains below 1.3400. Sterling is struggling to build on its gains against the US Dollar on Wednesday, despite UK inflation cementing the case for a Bank of England rate increase at its next meeting. Heightened geopolitical tensions are supporting a recovery in the Greenback.

TMGM Analysis: Financial Market News, Economic Calendar & Market Insights

1.3400 eludes GBP/USD as geopolitical tensions support the Dollar despite higher UK inflation

A technology-stock rally fuelled by AI enthusiasm is lifting US equities into positive territory, offering market participants some direction as Wednesday's US economic releases remain sparse. US Treasury yields remain firm. The US 10-year T-note yield stands at 5.10%.

The geopolitical backdrop is providing further support for the Greenback. Although Tuesday's news pointed to a possible resolution, subsequent reports said the Pakistani Army Chief had met Iranian officials in Tehran and put forward a “compromise proposal,” while N12 news said he had delivered the US a “final warning.” The implication is that attacks would restart if Iran fails to agree to a peace deal.

September's UK Consumer Price Index (CPI) increased to 3.5% YoY from 3.1%, figures from the Office for National Statistics (ONS) showed. The rise was largely attributable to sharply higher energy prices triggered by the Middle East conflict.

This inflation release follows the latest UK employment report, which showed a modest increase in wages and further evidence of labour market resilience.

Against this backdrop, traders had assigned a 95% probability to a quarter-percentage-point Bank of England rate increase at the 5 November meeting.

BoE rate probabilities - Prime Terminal data

Next week's first budget from British Finance Minister John Healey is now in focus. Healey said earlier this month that the budget would strengthen Britain's resilience to the energy-price shock from the Iran war and provide the country with "a bit of breathing space."

GBP/USD Price Forecast: 1.3405–1.3409 resistance in focus

Chart Analysis GBP/USD — GBP/USD: Daily chart

At 1.3387 on the daily chart, GBP/USD retains a bearish near-term bias. The latest triple simple moving average at 1.3409 and the downward resistance trend line break at 1.3405 continue to cap the pair. Higher up, the upward support trend line breaks at 1.3620 and 1.3805 form a broader cluster of structural barriers. A Relative Strength Index (14) reading around 57 signals recovering bullish momentum, but its strength remains moderate and insufficient to clear the overhead supply.

The first upside hurdle is the downward resistance trend line break near 1.3405, with the triple simple moving average at 1.3409 just above it. A daily close beyond this band would clear a path towards resistance at the upward trend line break around 1.3620, followed by 1.3805. Immediate downside support now lies at 1.3271, the former downward resistance trend line break. A retreat below that level would strengthen the broader bearish bias and leave lower levels exposed in the sessions ahead.

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

Pound Sterling: Today's currency performance

Today's percentage moves in the British Pound (GBP) against the major currencies listed are set out below. Sterling recorded its strongest performance against the Euro.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		0.12%	-0.01%	-0.02%	0.07%	-0.41%	-0.10%	0.12%
EUR	-0.12%		-0.22%	-0.16%	-0.09%	-0.48%	-0.27%	-0.05%
GBP	0.01%	0.22%		0.04%	0.11%	-0.27%	-0.07%	0.16%
JPY	0.02%	0.16%	-0.04%		0.09%	-0.29%	-0.10%	0.13%
CAD	-0.07%	0.09%	-0.11%	-0.09%		-0.39%	-0.17%	0.04%
AUD	0.41%	0.48%	0.27%	0.29%	0.39%		0.22%	0.42%
NZD	0.10%	0.27%	0.07%	0.10%	0.17%	-0.22%		0.23%
CHF	-0.12%	0.05%	-0.16%	-0.13%	-0.04%	-0.42%	-0.23%

Percentage movements between major currencies are displayed in the heat map. Select the base currency in the left-hand column and the quote currency in the top row. For instance, choosing the British Pound on the left and following its row across to the US Dollar gives the percentage change for GBP (base)/USD (quote) in the corresponding cell.