British Pound softens below 1.3300 on hot US PPI, eyes on speeches from Bailey, Warsh
The GBP/USD pair declines to around 1.3270 during the early Asian session on Friday. The US September Producer Price Index (PPI) comes in hotter than expected, supporting the US Dollar (USD) against the British Pound (GBP). The speeches from Bank of England (BoE) Governor Andrew Bailey and Federal Reserve (Fed) Chair Kevin Warsh’s speech will be in the spotlight later on Friday.
Data released by the Bureau of Labor Statistics on Thursday showed that the US PPI jumped 6.3% YoY in September, the biggest gain since 2022. This figure followed a rise of 5.6% in August (revised from 5.4%) and came in above the market consensus of 5.3%.
Meanwhile, the PPI rose 1.3% on a monthly basis, compared to analysts' estimate of 0.5%. PPI ex Food & Energy increased by 0.7% and 5% on a monthly and yearly basis, respectively. Both of these readings came in hotter than forecasts.
The data did little to change interest rate expectations. Traders are now pricing in about a 29% odds of a Fed rate hike later this month, according to the CME FedWatch tool.
“With a second day in a row of higher-than-expected inflation numbers, it seems the Fed will have no choice but to raise rates again this year,” said Chris Zaccarelli, chief investment officer at Northlight Asset Management. “While we don’t expect them to raise rates later this month (because it is so close to the mid-term election), we do think that they will increase the Fed Funds rate another [quarter point] in December,” Chris added.
The UK economy unexpectedly grew in August, with Gross Domestic Product (GDP) rising by 0.1% MoM, compared with 0.4% growth in July. This figure came in stronger than the expectation of a 0.1% contraction.
The BoE is set to raise Bank Rate for the first time in more than three years to 4.0% in November, according to a majority of economists polled by Reuters.
Pound supported as dip buyers defend 1.32 and UK GDP bolsters BoE hike case
Analysts at Societe Generale highlight that “dip buyers lift spot back above 1.32 pivot, supported by lower US yields,” underscoring the importance of this level in the current GBP/USD trading range. They add that “above forecast UK GDP adds to case for November BoE hike,” reinforcing the constructive near-term backdrop for the Pound as markets lean further toward additional policy tightening by the BoE.
Goolsbee flags discouraging inflation data but keeps cautious optimism alive
Fed's Goolsbee scores 7.1/10 on the FXS Speechtracker, modestly above the 6.7/10 historical average, signaling a slightly more impactful appearance relative to the established baseline. The description of the latest data as "a discouraging month in terms of inflation" introduces a clear hawkish tilt, but the conditional optimism that inflation drivers could fade "in short order" tempers the tone, while the warning that AI-driven overheating demand would be "more disturbing" and must be addressed underscores a readiness to tighten if structural demand pressures emerge. Overall, the mix of concern over recent inflation and conditional optimism keeps the stance cautiously hawkish, with markets likely to see elevated sensitivity in Dollar pricing to incoming price and AI-related demand data.
The FXS Fed Sentiment Index slipped by 0.41 points to 127.51, indicating a small pullback in perceived hawkishness even as the index remains firmly above the neutral 100 mark. This configuration suggests that, despite the slight moderation in tone, the broader Fed communication backdrop is still clearly hawkish, and Goolsbee's above-baseline FXS Speechtracker score reinforces the view that policy risks remain skewed toward tighter conditions rather than an imminent dovish pivot.
Technical Analysis: GBP/USD keeps a neutral tone in the near term
In the daily chart, GBP/USD sits below the 100-day simple moving average (SMA) but holds above the Bollinger Bands (20, 2) middle band, leaving price trapped in a mid-range consolidation. The Relative Strength Index (14) at 47.0 stays near neutral territory, suggesting a lack of clear directional momentum as the pair oscillates between nearby band support and overhead trend resistance.
On the topside, initial resistance is aligned with the Bollinger upper band at 1.3335, with a stronger barrier at the 100-day SMA near 1.3390, which caps the broader bullish attempts. On the downside, immediate support emerges at the Bollinger middle band around 1.3250, ahead of a deeper cushion at the lower band near 1.3160, where a break would open the way for a more pronounced bearish extension.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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