British Pound’s losing streak against US Dollar continues as attention turns to US PPI

• Selling pressure takes the British Pound closer to 1.3227 against the US Dollar on Friday.
• Persistent US inflation and a hawkish Fed outlook continue to underpin the US Dollar, according to NBC.
• US PPI figures and UK employment and CPI releases are next on investors’ radar.

Selling pressure on the British Pound (GBP) against the US Dollar (USD) persists on Friday, putting it on course for a fourth consecutive trading day of losses. With expectations of a faster monetary tightening cycle from the Federal Reserve (Fed) sustaining the US Dollar’s outperformance, GBP/USD retreats towards 1.3227.

The US Dollar Index (DXY) remains close to Thursday’s 19-month high of 103.24 at the time of writing. The index tracks the Greenback against a basket of six major currencies.

Can inflation and the Fed outlook sustain the Dollar’s safe-haven appeal?

According to strategists at National Bank of Canada (NBC), the Dollar “remains supported by persistent inflation and the prospect of further Fed tightening.” Their policy assessment is that “following October’s pause, another firm Consumer Price Index (CPI) report reinforces our expectation for tighter policy before year-end,” while a “deterioration in global risk appetite could provide further support through safe-haven demand.”

Tuesday’s US CPI release for October put monthly headline inflation at 0.4% and core inflation at 0.3%, with both readings exceeding expectations.

Before the US CPI figures were released, Fed Governor Christopher Waller had warned that “half-point Fed rate hike may be needed in December, if October core CPI inflation comes in around 0.3% or higher.”

How is Waller’s hawkish stance lifting Fed rate hike expectations?

A 9/10 FXS Speechtracker score, compared with a historical average of 7.3/10, highlights the distinctly hawkish tone of Fed Governor Waller’s remarks and his unusually strong emphasis on tighter policy. His willingness to consider a half-point Fed rate hike in December if core CPI reaches 0.3% or higher, alongside support for a quarter-point increase even if inflation data improve, points to a clear preference for further tightening. He described inflation as “too high” and recent data as “bad.” Broad-based price increases, continuing producer and energy price pressures, and the need to raise real interest rates all strengthen the assessment that policy is not yet sufficiently restrictive. Sharp movements in share prices carry limited weight in that assessment.

An increase of 3.17 points took the FXS Fed Sentiment Index to 145.50, placing it firmly in hawkish territory and aligning with the high FXS Speechtracker score. The shift points to a significant tightening in the Fed’s perceived policy stance. As markets assign a greater probability to December rate hikes, this is likely to underpin the Dollar and leave interest rate-sensitive assets under pressure.

Attention later in the day turns to October’s US Producer Price Index (PPI), due for release at 13:30 GMT.

For the British currency, the focus is moving to next week’s United Kingdom (UK) labour market figures for the three months ending September, alongside October’s Consumer Price Index (CPI) release.

GBP/USD Technical Analysis: Can the Pair Ease Its Bearish Bias?

A near-term bearish outlook continues to shape GBP/USD on the daily chart, where the pair trades at 1.3226. Spot remains beneath the 20-period exponential moving average (EMA) of 1.3337, leaving that level as immediate overhead resistance. At 39.9, the Relative Strength Index (RSI) is also below the neutral 50 mark. This suggests that selling pressure remains dominant, although the indicator has not reached oversold extremes.

For a more durable recovery to become possible, GBP/USD would need a daily close above its first resistance at the 20-day EMA of 1.3337, easing the prevailing bearish tone. Without that break, further declines remain a risk. Traders are likely to sell on rebounds for as long as momentum stays below the midline.

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