GBP/USD lower after US CPI figures and UK GDP data

• GBP/USD posted another day of losses below 1.3050.
• US CPI came in mixed and markets discounted the chances of a 50 bps cut.
• At the start of the session, the UK reported weak GDP figures.

GBP/USD remains under pressure, trading near 1.3045 as the market reacted to the latest US inflation data. Economic activity launched during the European session appears to have added pressure on the pound.

While headline inflation eased, the annual core CPI, which excludes volatile food and energy prices, was unchanged at 3.2 percent in August, in line with market expectations. However, on a monthly basis, both CPI and core CPI rose by 0.2% and 0.3% respectively, beating market forecasts. The data prompted traders to discount the odds of a 50-basis-point rate cut by the Federal Reserve, and the market is now pricing in an 85% chance of a 25-basis-point rate cut.

What weakened the GBP was the report on the weak release of Gross Domestic Product (GDP) during the European sessions. Despite this, leading indicators point to a potential recovery in UK economic activity, suggesting the Bank of England is unlikely to cut rates by more than the 50 basis points currently anticipated by the end of the year, which would could provide some support for the GBP.

GBP/USD Technical Outlook

GBP/USD’s decline to 1.3045 reflects deepening bearish pressure, with key technical indicators such as the Relative Strength Index (RSI) pointing down near 50 and the Moving Average Convergence Divergence (MACD) firmly in negative territory. This suggests bearish sentiment may persist in the short term, especially if the RSI breaks above the 50 barrier.