GBP/USD Price Forecast: Seems vulnerable as soft UK CPI lifts December BoE rate cut bets

The GBP/USD pair trades with a negative bias for the fourth straight day and touches a fresh weekly low following the release of the UK consumer inflation figures this Wednesday. The UK Office for National Statistics (ONS) reported that the headline Consumer Price Index (CPI) rose 3.6% over the year in October, down from 3.8% the previous month. Adding to this, the core gauge, which excludes volatile energy and food prices, slowed from the 3.5% growth seen in September to 3.4% during the reported month. This validates the Bank of England's (BoE) view that inflation is easing and backs the case for an interest rate cut in December, which acts as a headwind for the British Pound (GBP).

This comes amid uncertainty around UK Finance Minister Rachel Reeves’ Autumn Budget on November 26, which contributes to capping the GBP/USD pair. The chancellor had planned to raise income tax rates but abandoned the proposal after receiving better forecasts from the Office for Budget Responsibility (OBR), which indicated that the fiscal gap was closer to £20 billion rather than the £30 billion originally feared. The reaction in the bond market, however, reflects concerns about fiscal policy amid a challenging broader economic backdrop heading into 2026. This, in turn, favors the GBP bears and might continue to act as a headwind for the GBP/USD pair.

Furthermore, the US Dollar (USD) preserves its recent gains to a one-week high amid reduced bets for another interest rate cut by the US Federal Reserve (Fed) next month, which contributes to capping the GBP/USD pair. However, concerns about the weakening economic momentum on the back of the longest-ever US government shutdown keep a lid on the USD. The USD bulls also seem reluctant and opt to wait for more cues about the Fed's rate-cut path. Hence, the focus remains on the release of FOMC minutes, due later today, which, along with the delayed US Nonfarm Payrolls (NFP) report for September on Thursday, would provide a fresh impetus to the GBP/USD pair.

GBP/USD daily chart

Technical Outlook

The recent repeated failures to conquer the 1.3200 mark come on top of a breakdown through a technically significant 200-day Simple Moving Average (SMA) and favor the GBP/USD bears. Moreover, oscillators on the daily chart have recovered from the overbought zone and are holding deep in negative territory. This, in turn, suggests that the path of least resistance for spot prices is to the downside and backs the case for breakdown through the 1.3100 round figure. Some follow-through selling below last week's swing low, around the 1.3085 region, should pave the way for a fall towards the 1.3000 mark, or the lowest level since April, touched earlier this month. A convincing break below would expose the next relevant support near the 1.2950 zone before spot prices eventually drop to sub-1.2900 levels.

On the flip side, the 1.3155-1.3160 region now seems to act as an immediate hurdle ahead of the 1.3200 mark, above which a bout of short-covering could lift the GBP/USD pair to the 1.3100 neighborhood, or the 200-day SMA. The latter should act as a key pivotal point for short-term traders, which, if cleared decisively, might shift the near-term bias in favor of bullish traders and pave the way for additional gains. Spot prices might then extend the positive move towards the 1.3365 intermediate resistance en route to the 1.3400 round figure.