News report 💱 Forex 🌍 GLOBAL

GBP/USD Slips Below 1.33 as US 10-Year Yield Hits 5% After Hot CPI Data

GBP/USD dropped below the 1.3300 level as hawkish Fed rhetoric and a 5% US 10-year yield bolstered the Dollar, with investors now awaiting UK GDP and US PPI data for further direction.

🕐 1 min read

2 assets impacted (Forex, Bonds). Net bias: 1 Bullish, 1 Bearish, 0 Neutral. Strongest signal: GBP/USD ↓ 6/10 (85% confidence).

📊 Affected Assets (2)

GBP/USD
Bearish 🤖 85%
📅 Short-term 🌍 GLOBAL · Explicit

Hot US core CPI at 0.3% MoM for a third straight month triggered hawkish Fed rhetoric, with Waller signaling a 50bp hike and markets fully pricing a 25bp hike. The pair fell 0.55% below 1.3300 to 1.3282, with rising US yields adding pressure. Technicals reinforce the bearish tone, with price below the 50/100/200-day SMA cluster near 1.3352 and support seen at 1.3159 and 1.3140.

Catalysts
  • ▼ US CPI and core CPI at 0.3% MoM on Tuesday, above 0.2% estimates
  • ▼ Fed's Waller said he would back a 50bp hike if core CPI was 0.3%; Logan and Paulson also hawkish
Risk Factors
  • ▲ Strong UK GDP data on Thursday could reverse the move
  • ▲ Softer US PPI on Friday could cool rate-hike expectations
US10Y
Bullish 🤖 80%
📅 Short-term 🌍 US · Explicit

The 10-year T-note yield reached 5%, up nearly 12 basis points on Tuesday, as the hot 0.3% MoM core CPI and hawkish Fed commentary led markets to fully price a 25bp rate hike. Continued hawkish signals from officials like Logan and Paulson support further yield pressure upward into Friday's PPI release.

Catalysts
  • ▲ Core CPI at 0.3% MoM for a third straight month, above 0.2% estimates
  • ▲ Markets fully pricing a 25bp Fed rate hike per CME FedWatch Tool
Risk Factors
  • ▼ Softer PPI or jobless claims data could ease rate-hike expectations
  • ▼ Dovish comments from Bowman and Schmid hint at some caution within the Fed

🧭 Full analysis of these assets

🎯 Key Takeaways

  • The GBP/USD pair fell 0.55% to trade at 1.3282, breaking below the 1.3300 psychological support level.
  • US core CPI rose 0.3% MoM for the third consecutive month, exceeding the 0.2% estimate.
  • The US 10-year Treasury yield climbed nearly 12 basis points to reach 5%.
  • Fed Governor Christopher Waller indicated support for a 50bp rate hike following the inflation report.

📝 Executive Summary

The British Pound fell 0.55% to 1.3282 against the US Dollar as markets reacted to a hot 0.3% MoM core CPI reading. Fed officials, including Christopher Waller, signaled potential for aggressive rate hikes, driving the US 10-year Treasury yield up nearly 12 basis points to 5%.

❓ FAQ

GBP/USD · Why did the Pound fall below 1.33?

A hotter-than-expected US inflation reading led Fed officials, including Governor Waller, to signal faster rate hikes, prompting traders to buy the US Dollar while the 10-year US yield rose about 12 basis points to 5%.

GBP/USD · What could change the Pound's direction?

Thursday's UK GDP figures and Friday's US PPI data are the next catalysts; stronger UK growth or softer US inflation could help the Pound recover, while the opposite would add pressure.

US10Y · Why did the 10-year US yield rise to 5%?

US inflation came in hotter than expected and several Fed officials signaled readiness to hike rates faster, leading markets to fully price in a 25-basis-point hike and pushing the yield up nearly 12 basis points.