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British Pound surges as hot US PPI fails to revive Fed hike bets

  • GBP/USD jumps 0.56% to 1.3267 as US Dollar weakness accelerates.
  • US PPI surges 6.3% YoY, exceeding forecasts and fueling inflation concerns.
  • October Fed hike odds retreat to 26%, while December reaches 92%.

The Pound Sterling (GBP) registers solid gains against the US Dollar (USD) on Thursday, even though the latest US inflation data, rather than fueling speculation of an October Fed hike, is nearly cementing the case for December. The GBP/USD pair trades at 1.3267, up 0.56%, after reaching a low of 1.3184.

Sterling rallies as fading October Fed tightening expectations tumble the US Dollar

The US Producer Price Index (PPI) for September rose 6.3% YoY, above estimates of 5.3%, while on a monthly basis it expanded 1.3%, above forecasts of 0.5%, marking its highest level since March 2022. Core PPI, which excludes food and energy, climbed from 4.8% to 5% YoY, and 0.7% MoM, also higher than the forecast of 0.5%.

US Retail Sales in September cooled from 1.3% to 0.8% MoM but came in better than economists' projections of 0.3%. Further data showed that Initial Jobless Claims for the week ending October 10 came at 199K, below forecasts of 200K.

Surprisingly, investors didn’t price in further tightening for October’s meeting. A day ago, after the hotter-than-expected CPI, the odds rose to as high as 60%, before ending Wednesday's session near 40%. As of writing, money markets priced in a slim 26% chance of a 25-basis-point rate hike, though for December they priced in a 92% chance.

Consequently, the US Dollar took a hit, as reflected in the US Dollar Index (DXY). The DXY, which tracks the performance of the buck’s value against a basket of six currencies, dipped 0.37% to 102.15.

US Treasury yields also edged lower, perhaps as traders await Fed Chair Kevin Warsh's speech on Friday.

In the UK, growth data surprised investors, with the Gross Domestic Product (GDP) growing 0.1% MoM in August, above forecasts of a 0.1% contraction as traders brace for the release of the Autumn Budget,

The British Finance Minister, John Healey, said the budget will include measures to reinforce the economy's resilience, while reiterating that it will meet the fiscal rules.

BoE Deputy Governor Sarah Breeden commented that British companies cutting costs due to high energy prices could make the central bank’s job easier in containing inflation.

Ahead, the leaders of the Bank of England (BoE) and the Federal Reserve (Fed), Andrew Bailey and Kevin Warsh, respectively, would cross wires.

GBP/USD Price Forecast: Technical outlook

Chart Analysis GBP/USD
GBP/USD daily chart

In the daily chart, GBP/USD trades at 1.3255, keeping a bearish near-term tone as it remains below the latest triple simple moving average (SMA) reading around 1.3421 and under a series of broken support trend lines now acting as resistance. The downward‑sloping resistance trend line that was breached near 1.3284 caps the immediate recovery, while the Relative Strength Index (14) at 45.2 stays below the neutral 50 mark, hinting at still‑weak momentum rather than an outright oversold condition.

On the topside, initial resistance is seen at the 1.3284 trend‑line break, followed by the downward resistance line intersecting near 1.3414 and the composite triple SMA cluster close to 1.3421, which together form a dense supply zone. Above that, the former upward support lines turned resistance at 1.3596 and 1.3786 define more distant barriers; in the absence of nearby mapped supports, a daily close back above 1.3414/1.3421 would be needed to start easing the current bearish pressure.

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

(This story was corrected on October 15 at 16:21 GMT to say that US Core PPI rose 0.7% MoM, not 0.8%.)

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
USD-0.45%-0.47%-0.13%-0.30%0.81%-0.28%-0.67%
EUR0.45%-0.03%0.30%0.16%1.31%0.16%-0.23%
GBP0.47%0.03%0.36%0.15%1.31%0.18%-0.21%
JPY0.13%-0.30%-0.36%-0.20%0.95%-0.19%-0.56%
CAD0.30%-0.16%-0.15%0.20%1.13%0.03%-0.37%
AUD-0.81%-1.31%-1.31%-0.95%-1.13%-1.09%-1.49%
NZD0.28%-0.16%-0.18%0.19%-0.03%1.09%-0.41%
CHF0.67%0.23%0.21%0.56%0.37%1.49%0.41%

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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