|

GBP/USD drops below 1.2400 after US CPI data

  • GBP/USD hits a daily low of 1.2374 as US inflation jumps above 3%.
  • The US Dollar strengthens as investors expect the Fed's first rate cut until September 2025.
  • If GBP/USD prints a daily close below 1.2400, sellers would target 1.2300.

The Pound Sterling (GBP) slipped during the North American session after the latest United States (US) inflation report showed that prices continued to rise, pushing back expectations of a Federal Reserve (Fed) rate cut in the first half of 2025. The GBP/USD pair trades at 1.2387, down 0.47%.

Pound dips as US inflation surges

Inflation reaccelerates in the US, as the US Bureau of Labor Statistics (BLS) reveals. The Consumer Price Index (CPI) rose in January above 3% YoY for the first time since June 2024. Month-over-month (MoM) figures jumped 0.5%, up from December’s 0.4%. In the meantime, excluding volatile items, CPI increased by 3.3% YoY from 3.2%, and MoM expanded by 0.4%, up from 0.2%, exceeding estimates of 0.3%.

After the data, investors expect the first rate cut until September, according to data from Prime Market Terminal. The swaps market had priced in 20 basis points of easing toward the September 17 meeting, down from last week’s 45 bps.

Source: Prime Market Terminal

In the UK, the National Institute of Economic and Social Research (NIESR) predicts the Bank of England (BoE) has little room to cut rates further and predicts the BoE will cut rates once in 2025 and again in 2026.

This week, traders are watching Fed Chair Jerome Powell's testimony at the US House of Representatives. Besides him, Atlanta’s Fed Raphael Bostic and Governor Christopher Waller will cross the wires.

In the UK, the docket will feature Gross Domestic Product (GDP) figures for Q4 2024. Economists expect the economy to contract by -0.1% QoQ, yet on an annual basis, they estimate growth of 1.1%, up from Q3's 0.9%.

GBP/USD Price Forecast: Technical outlook

GBP/USD price action indicates the pair remains tilted to the downside but is set to consolidate within the 1.2330 - 1.2450 area. The Relative Strength Index (RSI) suggests that momentum remains bearish, opening the door for further selling pressure in the pair.

A daily close below 1.2400 could sponsor a leg toward the February 11 low of 1.2332, followed by the February 3 low of 1.2248. On further weakness, 1.22000 is up next. Conversely, if GBP/USD rises past 1.2400 and challenges the 50-day Simple Moving Average (SMA) at 1.2475, the exchange rate could aim towards 1.2500.

British Pound 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 Japanese Yen.

 USDEURGBPJPYCADAUDNZDCHF
USD 0.16%0.40%1.24%0.25%0.68%0.69%0.14%
EUR-0.16% 0.24%1.07%0.09%0.52%0.52%-0.02%
GBP-0.40%-0.24% 0.80%-0.14%0.28%0.29%-0.26%
JPY-1.24%-1.07%-0.80% -0.97%-0.54%-0.54%-1.07%
CAD-0.25%-0.09%0.14%0.97% 0.43%0.43%-0.11%
AUD-0.68%-0.52%-0.28%0.54%-0.43% 0.00%-0.54%
NZD-0.69%-0.52%-0.29%0.54%-0.43%-0.00% -0.54%
CHF-0.14%0.02%0.26%1.07%0.11%0.54%0.54% 

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.

More from Christian Borjon Valencia
Share:

Editor's Picks

EUR/USD stays defensive below 1.1900 as USD recovers

EUR/USD trades in negative territory for the third consecutive day, below 1.1900 in the European session on Thursday. A modest rebound in the US Dollar is weighing on the pair, despite an upbeat market mood. Traders keep an eye on the US weekly Initial Jobless Claims data for further trading impetus. 

GBP/USD holds above 1.3600 after UK data dump

\GBP/USD moves little while holding above 1.3600 in the European session on Thursday, following the release of the UK Q4 preliminary GDP, which showed a 0.1% growth against a 0.2% increase expected. The UK industrial sector activity deteriorated in Decembert, keeping the downward pressure intact on the Pound Sterling. 

Gold sticks to modest intraday losses as reduced March Fed rate cut bets underpin USD

Gold languishes near the lower end of its daily range heading into the European session on Thursday. The precious metal, however, lacks follow-through selling amid mixed cues and currently trades above the $5,050 level, well within striking distance of a nearly two-week low touched the previous day.

Cardano eyes short-term rebound as derivatives sentiment improves

Cardano (ADA) is trading at $0.257 at the time of writing on Thursday, after slipping more than 4% so far this week. Derivatives sentiment improves as ADA’s funding rates turn positive alongside rising long bets among traders.

A tale of two labour markets: Headline strength masks underlying weakness

Undoubtedly, yesterday’s delayed US January jobs report delivered a strong headline – one that surpassed most estimates. However, optimism quickly faded amid sobering benchmark revisions.

Sonic Labs’ vertical integration fuels recovery in S token

Sonic, previously Fantom (FTM), is extending its recovery trade at $0.048 at the time of writing, after rebounding by over 12% the previous day. The recovery thesis’ strengths lie in the optimism surrounding Sonic Labs’ Wednesday announcement to shift to a vertically integrated model, aimed at boosting S token utility.