US PPI in focus as British Pound’s losing run against US Dollar continues

• 1.3227 is in sight as the British Pound extends its decline 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, alongside UK employment and CPI releases, are next on investors’ radar.

GBP/USD retreats to near 1.3227. Friday marks the fourth consecutive trading day of losses for the British Pound (GBP) against the US Dollar (USD). Expectations that the Federal Reserve (Fed) will accelerate its monetary tightening cycle continue to drive the US Dollar’s outperformance.

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

Inflation and Fed tightening outlook sustain Dollar’s safe-haven appeal

Persistent price pressures and policy expectations remain key supports for the Dollar, according to strategists at National Bank of Canada (NBC), who say it “remains supported by persistent inflation and the prospect of further Fed tightening.” In their assessment, “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.”

Released on Tuesday, the October US CPI report put monthly headline inflation at 0.4% and core inflation at 0.3%. Both increases exceeded expectations.

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

Waller’s hawkish message lifts expectations for Fed rate hikes

A 9/10 FXS Speechtracker score placed Fed Governor Waller well above his historical average of 7.3/10, highlighting an unusually strong preference for tighter policy. He explicitly left open a half-point Fed rate hike in December if core CPI reaches 0.3% or higher, while backing a quarter-point increase even if inflation data improve. That position indicates a clear inclination towards further tightening, with inflation considered “too high” and recent figures described as “bad.” Broad-based price gains, sustained producer and energy price pressures, and the need to raise real interest rates strengthen the view that policy is not yet sufficiently restrictive. Sharp equity price swings carry limited weight in that assessment.

An increase of 3.17 points took the FXS Fed Sentiment Index to 145.50, leaving it firmly in hawkish territory and aligned with the high FXS Speechtracker score. The shift points to a materially tighter perceived Fed stance. As markets assign a greater probability to December rate hikes, this is likely to support the Dollar and maintain pressure on rate-sensitive assets.

October US Producer Price Index (PPI) figures are due at 13:30 GMT later in the day and will be a focus for investors.

For the British currency, attention is turning to next week’s United Kingdom (UK) releases: labour market figures covering the three months ending September and Consumer Price Index (CPI) data for October.

GBP/USD Technical Outlook

At 1.3226 on the daily chart, GBP/USD maintains a bearish short-term outlook. Spot trades beneath the 20-period exponential moving average (EMA) of 1.3337, its immediate overhead resistance. A Relative Strength Index (RSI) reading of 39.9, below the neutral 50 threshold, suggests selling pressure remains dominant, although the pair is not at oversold extremes.

The first upside hurdle is the 20-day EMA at 1.3337. A daily close above it would be required to temper the bearish outlook and create scope for a more durable recovery. Without that break, further losses remain a risk. Traders are likely to sell 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.)