The British Pound faces downward pressure as the US Dollar strengthens on aggressive Fed tightening bets and geopolitical safe-haven demand, though BoE hawkishness provides a floor.
The Dollar extended a rally inspired by hot US consumer inflation to a near one-week top, with traders pricing in a possible December jumbo Fed rate hike after Governor Waller's hawkish comments on Tuesday. The US-Iran geopolitical risk premium and tanker attacks in the Strait of Hormuz add further safe-haven support, though hopes of a diplomatic breakthrough could curb gains.
The pair slid for a second straight day toward its one-and-a-half-week low, holding just above 1.3300 after a hot US consumer inflation print boosted bets on an aggressive Fed tightening, including a possible December jumbo hike following Waller's hawkish comments. BoE Deputy Governor Lombardelli's Tuesday remarks that further UK rate hikes remain likely limit the downside. A convincing break below 1.3300 would confirm the uptrend has run out of steam.
The GBP/USD pair is trading lower for the second consecutive day, hovering near the 1.3300 support level. The US Dollar continues to rally following hot consumer inflation data and hawkish comments from Fed Governor Christopher Waller, which have increased market expectations for a potential jumbo rate hike in December.
Hot US consumer inflation has lifted expectations that the Federal Reserve will tighten more aggressively, including a possible jumbo rate hike in December after Governor Waller's hawkish comments, and geopolitical tensions with Iran are adding safe-haven demand.
The Bank of England's hawkish stance could support the Pound, and a potential diplomatic breakthrough in the US-Iran conflict could weaken the Dollar, which would help limit further losses for the pair.