GBPUSD Rallying As UK Inflation Soars
UK Inflation Jumps Again
GBP is continuing to push higher today, boosted by ongoing USD weakness and a fresh jump in UK inflation as reported this morning. On the data front, annualised headline CPI for September was seen surging to 3.5% from 3.1% prior, above the 3.4% the market was looking for. Core CPI was also higher at 2.8% from 2.6% prior. With this latest increase, UK inflation is now back at its highest level since October 2025 with the surge largely driven by the increase in motor fuel prices. The data comes on the back of the recent upside surprise in GDP data as well as a reduction in the UK trade deficit, all-in-all pointing to unexpected resilience in the economy. On the back of this release, traders are now fully pricing in a BOE rate hike for November.
Weak USD
Weakness in the US Dollar is also helping boost GBPUSD here. The greenback has come under fresh pressure recently amidst a downturn in October FOMC rate hike pricing given the recent AI-driven market turmoil in the US. AI funding fears saw big tech names plunging last week, dragging stock markets lower. Against this backdrop, expectations of an October hike were seen dropping sharply. Near-term, while USD remains weak and BOE hiking expectations remain elevated, GBPUSD has room to push higher.
Technical Views
GBPUSD
The bounce off the 1.3181 level is gathering pace here with price now back above the 1.3301 level. While above here and with momentum studies bullish, focus is on a continued push higher to the 1.3478 level next and the bear trend line from 2025 highs above.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.