Pound Sterling remains firm against US Dollar ahead of US CPI data
- The Pound Sterling holds onto gains near 1.3470 against the US Dollar ahead of the US inflation data release for December.
- Fed’s Bostic warns of high inflation and stresses the need to bring it under control.
- Rising concerns about the Fed’s independence could hit the US sovereign rating.
The Pound Sterling (GBP) holds onto Monday’s gains around 1.3470 against the US Dollar (USD) during the European trading session on Tuesday. The GBP/USD pair trades firmly ahead of the United States (US) Consumer Price Index (CPI) data for December, which will be published at 13:30 GMT.
Investors will monitor the US CPI data to get fresh cues on the current price growth in the economy and the Federal Reserve’s (Fed) monetary policy outlook. However, the impact of inflation figures is set to be limited on market expectations regarding interest rates in the near term, as Fed officials are more concerned about labor market risks.
In the December policy meeting, the Fed reduced interest rates by 25 basis points (bps) to 3.50%-3.75% in an attempt to contain employment risks and stated that there are “no inflation concerns in the long run”. “It doesn't feel like a hot economy,” Fed Chair Jerome Powell said in the press conference after the decision, adding, “Evidence is growing that services inflation has come down, and goods inflation is entirely due to tariffs.”
On the contrary, Atlanta Fed President Raphael Bostic warned in an interview with radio station WLRN on Friday that inflation is “too high” and the central bank needs to get it “under control”.
The US core inflation – which excludes volatile food and energy items – is expected to have risen at a faster pace to 2.7% YoY in December from 2.6% the previous month, with the headline figure growing steadily by 2.7%. Month-on-month (MoM), both headline and core CPI are estimated to have grown by 0.3%.
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.01% | -0.05% | 0.44% | 0.02% | 0.22% | 0.06% | 0.07% | |
| EUR | 0.01% | -0.04% | 0.48% | 0.04% | 0.24% | 0.08% | 0.09% | |
| GBP | 0.05% | 0.04% | 0.49% | 0.08% | 0.29% | 0.12% | 0.12% | |
| JPY | -0.44% | -0.48% | -0.49% | -0.42% | -0.22% | -0.39% | -0.37% | |
| CAD | -0.02% | -0.04% | -0.08% | 0.42% | 0.20% | 0.04% | 0.05% | |
| AUD | -0.22% | -0.24% | -0.29% | 0.22% | -0.20% | -0.16% | -0.15% | |
| NZD | -0.06% | -0.08% | -0.12% | 0.39% | -0.04% | 0.16% | 0.01% | |
| CHF | -0.07% | -0.09% | -0.12% | 0.37% | -0.05% | 0.15% | -0.01% |
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 US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
Daily Digest Market Movers: Investors shift focus to UK monthly GDP data
- The Pound Sterling trades broadly firm against its major currency peers, except the New Zealand Dollar (NZD), on Tuesday. The GBP gains as market sentiment for currencies that are facing limited fiscal and monetary risks remains upbeat, following criminal charges against Fed’s Powell over mismanaging funds allocated for the renovation of Washington’s headquarters.
- On Monday, US federal prosecutors sent a subpoena to Jerome Powell, which directs an inquiry into his statements in his testimony at the Senate in June 2025 and an examination of his spending records.
- In response, the Fed’s chair stated that these criminal charges are a consequence of the central bank setting “interest rates based on its assessment of the public interest rather than the president's preferences”.
- On the domestic front, investors keenly await the United Kingdom (UK) monthly Gross Domestic Product (GDP) and the factory data for November, which are scheduled for Thursday. The Office for National Statistics (ONS) is expected to show that the economic growth remained flat after declining 0.1% in October. Meanwhile, MoM Manufacturing Production is estimated to have grown steadily by 0.5%, with Industrial Production remaining flat.
- Meanwhile, the outlook of the US Dollar has become uncertain as market experts believe that criminal charges against Jerome Powell are an attack on the Fed’s independence, a scenario that could hit the US sovereign rating. Analysts at Fitch Ratings have also noted that the central bank’s independence has been a key factor behind the strong US credit rating.
- This week, investors will also focus on the US Retail Sales and the Producer Price Index (PPI) data for December, which will be released on Wednesday.
Technical Analysis: GBP/USD wobbles below 1.3500
GBP/USD trades flat around 1.3463 at the press time. The 20-day Exponential Moving Average at 1.3442 is rising, with price holding above it to preserve short-term upside traction.
The 14-day Relative Strength Index (RSI) at 55 (neutral) indicates steady momentum rather than aggressive trend extension.
Measured from the 1.3791 high to the 1.3012 low, the pair wobbles inside the 50% Fibonacci retracement at 1.3402 and the 61.8% Fibonacci retracement at 1.3494. A break above the latter would improve the recovery profile and open the door towards the September 17 high of 1.3726, while a failure to clear overhead resistance would keep the rebound capped and encourage consolidation around the rising average.
(The technical analysis of this story was written with the help of an AI tool.)
Economic Indicator
Consumer Price Index (YoY)
Inflationary or deflationary tendencies are measured by periodically summing the prices of a basket of representative goods and services and presenting the data as The Consumer Price Index (CPI). CPI data is compiled on a monthly basis and released by the US Department of Labor Statistics. The YoY reading compares the prices of goods in the reference month to the same month a year earlier.The CPI is a key indicator to measure inflation and changes in purchasing trends. Generally speaking, a high reading is seen as bullish for the US Dollar (USD), while a low reading is seen as bearish.
Read more.Next release: Tue Jan 13, 2026 13:30
Frequency: Monthly
Consensus: 2.7%
Previous: 2.7%
Source: US Bureau of Labor Statistics
The US Federal Reserve (Fed) has a dual mandate of maintaining price stability and maximum employment. According to such mandate, inflation should be at around 2% YoY and has become the weakest pillar of the central bank’s directive ever since the world suffered a pandemic, which extends to these days. Price pressures keep rising amid supply-chain issues and bottlenecks, with the Consumer Price Index (CPI) hanging at multi-decade highs. The Fed has already taken measures to tame inflation and is expected to maintain an aggressive stance in the foreseeable future.
Author
Sagar Dua
FXStreet
Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.
