• US consumer prices increased by 0.2% in October.

• Traders expect Trump’s policies to drive inflation and pause or significantly slow Fed rate cuts.

• BoE’s Catherine Mann noted that inflation might be higher than expected in the medium term.

The GBP/USD forecast shows the dollar at new peaks as the Trump trade overshadows recent inflation figures. As a result, the pound remained weak against the greenback despite hawkish remarks from policymakers.

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On Wednesday, the US released its CPI report, which aligned with expectations. Consumer prices increased by 0.2% in October, while core prices increased by 0.3%. Meanwhile, the annual figure rose by 2.6%. Since the increase in inflation was expected, the Fed will likely lower borrowing costs in December.

The dollar initially retreated before climbing as market participants shifted their focus to Trump’s win. Traders expect Trump’s policies to drive inflation and pause or significantly slow Fed rate cuts.

The next significant reports will include wholesale inflation and retail sales. Producer prices are a leading indicator of future consumer prices. Therefore, rate-cut bets might ease if producer prices are higher than expected. The opposite is also true. Meanwhile, retail sales will show consumers’ financial health. High sales will show robust consumer spending, reducing rate-cut bets. On the other hand, low sales will indicate weak consumer spending, solidifying bets for a December rate cut.

Meanwhile, in the UK, Bank of England policymaker Catherine Mann noted that inflation might be higher than expected in the medium term. Mann is the only policymaker who voted against a rate cut at the last BoE meeting. Market bets for rate cuts in the UK have dropped since the reading of the new government budget. The BoE might only cut rates twice next year.

GBP/USD key events today

• Core PPI m/m
• PPI m/m
• Unemployment Claims
• Fed Chair Powell Speaks

GBP/USD technical forecast: Bearish momentum head for the 1.2650 level

On the technical side, the GBP/USD price has broken below the 1.2750 key support to make a new low in the downtrend. Moreover, the price trades well below the 30-SMA, showing bears have a strong lead. At the same time, the RSI is in the oversold region, indicating solid bearish momentum.

The next target for the pair is at the 1.2650 support level. However, after such a steep collapse, bulls might be preparing to return for a pullback to the 1.2750 level or the 30-SMA.

https://www.forexcrunch.com/blog/2024/11/14/gbp-usd-forecast-trump-trade-eclipses-inflation-data/