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British Pound under pressure as hot PPI puts Fed hike in play

  • US PPI tops forecasts annually, lifting September Fed hike odds.
  • Oil above $100 keeps inflation pressure firmly on traders’ radar.
  • UK GDP and CPI data may test BoE patience.

The Pound Sterling (GBP) loses traction against the US Dollar (USD) on Thursday after the latest US producer inflation report, which exceeded estimates, prompting investors to price in a more hawkish Federal Reserve (Fed). At the time of writing, GBP/USD trades at 1.3525, down 0.17%.

GBP/USD slips as hot PPI and $100 Oil revive Fed risks

The US Producer Price Index (PPI) in August was in line with estimates of 0.4% MoM, but exceeded forecasts on an annual basis at 5.4%, above the 5.3% projected. Core figures were mostly aligned with economists' estimates, though the monthly figure was 0.2%, below estimates of 0.3%, in line with projections of 4.6% YoY.

Following the data release, traders seem more confident that the Fed will raise interest rates at the September meeting. The CME FedWatch Tool shows a nearly 70% chance of a 25-basis-point rate increase.

Worth noting that energy prices continued to trend higher, with Brent surpassing the $100 per barrel barrier and West Texas Intermediate (WTI) nearing this threshold as the Middle East conflict enters its seventh month of hostilities.

Other data showed that the labor market remains solid, with jobless claims at 206K, above forecasts of 205K but below the previous week's print.

Given the backdrop, traders' focus shifts to the US Consumer Price Index (CPI) report on Friday.

In the UK, Bank of England (BoE) officials remain split, yet the BoE is expected to keep interest rates unchanged at the September 17 meeting, with Governor Bailey pushing back against expectations for further tightening.

Traders are also waiting for GDP data on Friday, which is expected to stall at 0%, down from 0.3% MoM in June. Besides this, investors are waiting for British inflation and wage growth data next week.

GBP/USD Price Forecast: Technical outlook

Chart Analysis GBP/USD
GBP/USD daily chart

In the daily chart, GBP/USD trades at 1.3528. The pair holds a mild bullish bias as it sits above the clustered simple moving averages around 1.3476 and has reclaimed several former trend-line barriers, turning them into underlying support. The Relative Strength Index (14) hovers just above the 50 line, hinting that upside momentum is tentative rather than impulsive, but still favors further gains while the price action remains supported by these reclaimed structural levels.

On the downside, initial support is seen at the nearby moving-average cluster around 1.3476, reinforced by the broken downward and upward trend lines at 1.3467 and 1.3448. A deeper pullback would expose the former resistance trend-line break at 1.3362 as a more distant floor. On the topside, the next notable resistance comes in at the upward trendline break near 1.3675, where bulls would likely face a more meaningful test of the emerging uptrend.

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

Pound Sterling Price Today

The table below shows the percentage change of British Pound (GBP) against listed major currencies today. British Pound was the strongest against the Australian Dollar.

USDEURGBPJPYCADAUDNZDCHF
USD0.08%0.14%0.31%0.08%0.65%0.52%0.15%
EUR-0.08%0.07%0.23%-0.00%0.59%0.45%0.08%
GBP-0.14%-0.07%0.17%-0.07%0.52%0.38%0.02%
JPY-0.31%-0.23%-0.17%-0.24%0.35%0.18%-0.15%
CAD-0.08%0.00%0.07%0.24%0.58%0.44%0.09%
AUD-0.65%-0.59%-0.52%-0.35%-0.58%-0.14%-0.50%
NZD-0.52%-0.45%-0.38%-0.18%-0.44%0.14%-0.32%
CHF-0.15%-0.08%-0.02%0.15%-0.09%0.50%0.32%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick 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).

Author

Christian Borjon Valencia

Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.

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