GBP/USD resumes its uptrend on Friday, paring some of Thursday’s losses as the US Dollar (USD) recovers some ground. US inflation data kept the chances of the Federal Reserve cutting interest rates at its December meeting steady, weighing on the dollar. At the time of writing, the pair is trading at 1.3349, up 0.19%.
GBP/USD rises as US core PCE confirms Fed rate cut in December
The core personal consumption expenditures price index, the Fed’s preferred measure of inflation, which excludes food and energy, rose 0.2% month-on-month in September, unchanged from August and in line with estimates. In the 12 months to September, it fell from 2.9% to 2.8%.
Meanwhile, University of Michigan Consumer Confidence rose in December to 53.3, above estimates of 52 and up from November’s final reading of 51. “Consumers see a modest improvement over November on several dimensions, but the overall trend of views is broadly dismal,” noted Joan Hsu, director of consumer surveys.
Americans’ one-year inflation expectations fell in December from 4.5% to 4.1%. Over five years, it fell from 3.4% in November to 3.2%.
Given this backdrop, expectations for a 25 basis point Fed rate cut next week remained unchanged at 84%, as revealed in a report by the Federal Reserve. edge of capital Rate forecast overview data.
Following the release of the data, GBP/USD rebounded towards 1.3350 after zigzagging around 1.3340 as the US dollar fell on expectations of further easing.
In a note, Morgan Stanley said it expects a 25 basis point cut in December, January and April of 2026. They expect the federal funds rate to end up at 3%-3.25%.
Sterling shook off budget concerns last month, while business activity showed some improvement, according to S&P Global.
Despite this, the Bank of England is expected to cut interest rates by 25 basis points to 3.75% at its December 18 meeting after pausing its easing cycle in November.
GBP/USD Price Forecast: Technical Outlook
The GBP/USD pair appears to be restricted to the 100-day SMA at 1.3365, although the pair crossed the 200-day SMA at 1.3326. Hence, there is more consolidation ahead, and with the next Fed meeting approaching, the 100-day SMA is likely to be breached.
On this score, the next major resistance is 1.3400. Once this level is crossed, the next stop will be the October 17 high at 1.3471 and then 1.3500. On the other hand, a GBP/USD drop below 1.3300 targets the 50-day SMA at 1.3264, followed by 1.3200.
The price of the pound sterling this week
The table below shows the percentage change in the British Pound (GBP) against the major currencies listed this week. The British pound was the strongest against the Swiss franc.
| US dollars | euro | GBP | JPY | Canadian | Australian dollar | New Zealand dollar | Swiss franc | |
|---|---|---|---|---|---|---|---|---|
| US dollars | -0.42% | -0.77% | -0.54% | -0.89% | -1.39% | -0.79% | 0.12% | |
| euro | 0.42% | -0.35% | -0.11% | -0.47% | -0.98% | -0.37% | 0.54% | |
| GBP | 0.77% | 0.35% | 0.50% | -0.12% | -0.63% | -0.03% | 0.90% | |
| JPY | 0.54% | 0.11% | -0.50% | -0.35% | -0.87% | -0.26% | 0.65% | |
| Canadian | 0.89% | 0.47% | 0.12% | 0.35% | -0.56% | 0.10% | 1.01% | |
| Australian dollar | 1.39% | 0.98% | 0.63% | 0.87% | 0.56% | 0.61% | 1.53% | |
| New Zealand dollar | 0.79% | 0.37% | 0.03% | 0.26% | -0.10% | -0.61% | 0.92% | |
| Swiss franc | -0.12% | -0.54% | -0.90% | -0.65% | -1.01% | -1.53% | -0.92% |
The heat map shows the percentage changes in major currencies versus each other. The base currency is chosen from the left column, while the counter currency is chosen from the top row. For example, if you select the British pound from the left column and move along the horizontal line to the US dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).
