The Pound Sterling (GBP) faced sharp losses on Wednesday after fresh inflation data showed that price growth in the United Kingdom continues to moderate.
According to the Office for National Statistics (ONS), the core Consumer Price Index (CPI) — excluding food, energy, alcohol, and tobacco — rose 3.5% year-on-year in September,f below expectations of 3.7% and slightly lower than August’s 3.6%.
The headline CPI increased 3.8% annually, also missing the forecast of 4.0%. On a monthly basis, prices were unchanged, following a 0.3% rise in August. Inflation within the services sector, closely monitored by the Bank of England (BoE), remained steady at 4.7%.
Easing inflation has strengthened market bets that the BoE could cut interest rates again before the end of the year. Last week’s employment figures — which revealed a higher unemployment rate and slowing wage growth — had already reinforced dovish expectations.
Market Reaction: Pound Slides to Weekly Lows
The Pound extended its losses, with GBP/USD falling near 1.3310 during the European session — marking a fresh weekly low and the pair’s fourth consecutive day of declines. The weaker inflation data suggested that UK price pressures may have peaked, adding downward momentum to the currency.
At the same time, the US Dollar (USD) gained strength, with the US Dollar Index (DXY) holding firm around 99.00, supported by optimism over potential progress in US-China trade negotiations.
US President Donald Trump expressed confidence that both countries are close to a “fair deal,” though he later added uncertainty about an upcoming meeting with Chinese President Xi Jinping in South Korea.
Additionally, hopes that the US government could reopen soon provided further support for the Greenback. Senate Minority Leader Chuck Schumer said discussions were ongoing with Trump to negotiate a resolution, according to Reuters.
Investors now await the delayed US CPI data for September, due Friday, which could shape expectations for the Federal Reserve’s (Fed) next policy move. Economists forecast headline inflation to rise to 3.1% year-on-year, up from 2.9%, with core inflation also expected to grow 3.1%.
Technical Outlook
Technically, the GBP/USD pair continues to trade below the 20-day Exponential Moving Average (EMA) around 1.3407, signaling sustained bearish pressure.
The 14-day Relative Strength Index (RSI) hovers near 40.00 — a drop below this threshold could trigger renewed downside momentum.
On the downside, support lies at 1.3140, the low from August 1. On the upside, the 1.3500 psychological level acts as immediate resistance for any recovery attempts.
