2025-12-17 11:30:00
The UK CPI report here earlier today underwhelmed, missing on estimates as price pressures were softer than expected in November. That solidified the conviction for a BOE rate cut this week but also fanned the flames for a potentially quicker move in following that up for next year. As such, that’s putting pressure on the pound today with GBP/USD running into trouble on two fronts as the dollar is also keeping firmer across the board on the day.
As the dust settles for a bit, we’re seeing GBP/USD now hold around 1.3330 – down 0.7% on the day. That’s a little off the lows of 1.3311 but the technical equation has shifted quite significantly in favour of sellers. Let’s take a look.
GBP/USD hourly chart
The near-term chart shows a meaningful break below the key hourly moving averages, with sellers establishing price action below both the 100 (red line) and 200-hour (blue line) moving averages for the first time since 24 November; almost a month ago. The drop now sees the near-term bias switch to being more bearish even as the overall market conviction towards the BOE hasn’t shifted all too much.
Traders are pricing in ~69 bps of rate cuts through 2026, up just marginally from around ~67 bps before the UK CPI report. However, the next full 25 bps rate cut after the one this week is now priced for April 2026 and that is bumped forward from July 2026. So, that at least is something.
But amid a stronger dollar as well, the technical side of things is giving an added push to weigh GBP/USD lower on the day as seen above. And adding to the near-term breakdown as we are seeing, the daily chart also offers more validation to sellers:
GBP/USD daily chart
The confluence of the 100 (red line) and 200-day (blue line) moving averages is seen at 1.3345-59 in the chart above. And the latest drop is threatening to break that, reaffirming a more bearish bias once again in favour of sellers.
Coupled with a breakdown in the near-term chart, it is added technical conviction for sellers to put pressure on cable to drive the pair lower as we look towards the sessions ahead.
There will be some minor support closer to 1.3300 but if that gives way, the pair could be positioned for a steeper decline – at least based on what the chart might suggest.
However, the dollar side of the equation might threaten to mess things up with the greenback having been rather vulnerable more often than not in December trading. And as luck would have it, we only have roughly three more “real” trading days to the year before the Christmas and New Year holiday kicks in next week. That will impact liquidity conditions and make it even tougher to read into any of the exacerbated market moves on thinner flows.
