Is the British Pound heading for weekly losses as US PPI keeps Fed hawks in control?

• A pullback from 1.3460 leaves GBP/USD on course for a 0.90% weekly decline.
• At 6.5% YoY, US headline PPI reaches its highest level since 2022.
• Even as expectations of BoE tightening build, the probability of a December Fed rate hike nears 90%.

Sterling remains broadly steady against the US Dollar on Friday but is heading for a weekly decline of nearly 0.90%. GBP/USD is trading around 1.3230, nearly 0.05% higher, after the latest US producer inflation report showed the highest reading since 2022.

Can GBP/USD withstand US inflation pressure and Fed rate hike expectations?

Higher transportation and warehousing prices were the main drivers as the US Producer Price Index (PPI) rose by 6.5% YoY in October. The reading fell short of forecasts but exceeded September’s 6.3%. Excluding items such as food and energy, core PPI held at the previous month’s rate of 5%, in line with estimates.

Comments from Federal Reserve (Fed) officials continue to emerge. Warning that the inflation figures point to a worsening situation, Chicago Fed President Austan Goolsbee said this “would make the Fed more aggressive.”

According to the CME FedWatch Tool, money markets had assigned a nearly 90% probability to a 25 basis point Fed rate increase in December. A larger 50-basis-point hike by policymakers, however, carried only a slim 10% chance.

After reaching a weekly peak near 1.3460, GBP/USD moved lower as recent US inflation readings and hawkish remarks from Fed officials fuelled expectations that the central bank may begin a tightening cycle.

Thursday’s UK Gross Domestic Product (GDP) figures met estimates, following the Bank of England (BoE) rate hike last week. Market participants already anticipate a further move in December, assigning it an 85% probability.

UK inflation figures will be in focus for traders next week. On the US calendar, further Fed commentary is due, while Retail Sales and the minutes of the latest Federal Open Market Committee meeting will draw particular attention.

GBP/USD Price Forecast: Can the pair overcome technical resistance?

A near-term bearish bias persists on the daily GBP/USD chart, with the pair trading at 1.3236. Spot remains below the latest triple simple moving average (SMA) reading of around 1.3341, while former rising trend-line supports near 1.3360 and 1.3606 now serve as overhead resistance. At 40.6, the Relative Strength Index (RSI) sits below its midline, signalling continued downside pressure rather than oversold conditions. Descending resistance lines from 1.3869 and 1.3653 also suggest that the broader corrective pattern continues to limit rallies.

The first upside hurdle lies in the 1.3341–1.3360 cluster, where the triple SMA meets the nearest former trend support. Beyond this area, descending resistance around 1.3508 and 1.3544 comes into focus, followed by the higher former support zone near 1.3606. The current dataset identifies no clear structural support immediately below 1.3236. A sustained break beneath recent lows would therefore expose the pair to further declines into fresh territory. Sellers would retain control unless GBP/USD recovers and holds above the 1.3340–1.3360 band.

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