1.3300 in focus: British Pound hovers near one-week low as Fed hike bets strengthen USD

Hot US CPI sustains the USD rally, drawing renewed selling pressure on GBP/USD.
Expectations of a jumbo December rate rise strengthen after comments from the Fed’s Waller, giving the USD further support.
A hawkish BoE outlook could underpin the GBP, potentially containing the currency pair’s decline.

GBP/USD remains above 1.3300. After an intraday rise towards 1.3355 on Wednesday, the pair reverses lower for a second consecutive day. It retreats towards the one-and-a-half-week low reached the previous day. Conflicting drivers nevertheless keep spot prices above that threshold, suggesting caution for traders pursuing aggressive bearish positions.

TMGM Analysis: Financial Market News, Economic Calendar & Market Insights

Expectations of more forceful Federal Reserve (Fed) tightening lift the US Dollar (USD) to its highest level in nearly a week. The rally, triggered by hot US consumer inflation, continues to weigh on GBP/USD. Following hawkish remarks from Fed Governor Christopher Waller on Tuesday, traders have also begun to price in the prospect of a jumbo rate rise in December.

The Greenback draws additional support from a persistent geopolitical risk premium as the US-Iran standoff and tanker attacks in the Strait of Hormuz continue. Yet investors still hope for a diplomatic breakthrough that could end the US-Iran war. Such an outcome could restrain the USD and cushion GBP/USD against further losses.

Support for the British Pound (GBP) could also come from the hawkish stance of the Bank of England (BoE). On Tuesday, BoE Deputy Governor Clare Lombardelli said further interest rate increases remained likely, citing high energy prices and the resilience of the UK economy. A decisive break below 1.3300 is therefore required to confirm that GBP/USD’s recent advance has lost momentum.

7 Days: US Dollar Performance

Over the last 7 days, the US Dollar (USD) recorded its strongest performance against the Canadian Dollar. The table below presents its percentage changes against the major currencies listed.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		0.39%	0.68%	0.10%	1.47%	1.34%	0.25%	0.88%
EUR	-0.39%		0.30%	-0.28%	1.08%	0.95%	-0.14%	0.49%
GBP	-0.68%	-0.30%		-0.57%	0.78%	0.66%	-0.40%	0.19%
JPY	-0.10%	0.28%	0.57%		1.37%	1.24%	0.15%	0.78%
CAD	-1.47%	-1.08%	-0.78%	-1.37%		-0.13%	-1.20%	-0.58%
AUD	-1.34%	-0.95%	-0.66%	-1.24%	0.13%		-1.07%	-0.45%
NZD	-0.25%	0.14%	0.40%	-0.15%	1.20%	1.07%		0.63%
CHF	-0.88%	-0.49%	-0.19%	-0.78%	0.58%	0.45%	-0.63%

Percentage movements between the major currencies are displayed in the heat map. Select the base currency in the left-hand column and the quote currency in the top row. For instance, choosing the US Dollar on the left and following its row across to the Japanese Yen gives the percentage change for USD (base)/JPY (quote) in the corresponding cell.