U.S. CPI inflation indicator remains strong in October
- Consumer Price Index (CPI) rose by 2.6% year-on-year in December.
- In recent days, the British pound has weakened against the U.S.
- Bureau of Labor Statistics revealed that the CPI increased by 2.6% year-on-year in October and by 0.2% month-on-month.
U.S. Inflation and Currency Trends
The U.S. Consumer Price Index (CPI) rose by 2.6% year-on-year in December. This increase shows that inflation remains strong. Market traders have adjusted their expectations for the Federal Reserve, predicting an 80% chance of an interest rate cut on December 18, up from 58% earlier in the week. Traders are concerned that inflation may rise again, which could slow the Fed’s rate cuts.
In recent days, the British pound has weakened against the U.S. dollar. The GBP/USD has shown five consecutive downward trends, indicating a bear market. Analysts expect this trend to continue, with the next support level at 1.2550.
Data from the U.S. Bureau of Labor Statistics revealed that the CPI increased by 2.6% year-on-year in October and by 0.2% month-on-month. The core CPI also rose, remaining at 3.3% year-on-year and increasing by 0.3% month-on-month. Inflation in the U.S. may enter a challenging phase in 2025, with levels expected to stay significantly above 2%.
Factors contributing to inflation include potential tariffs from Trump and fiscal stimulus measures. Central banks are easing policies, while economic growth data has shown unexpected improvements. This situation raises concerns that inflation could prompt a more aggressive response from the Federal Reserve.
In the bond market, longer-term U.S. bond yields reacted moderately to the CPI data. The 10-year U.S. Treasury yield increased by 2.2 basis points to 4.454%, while the 30-year yield rose by 6.4 basis points to 4.639%.
GBP/USD Analysis
The British pound continues to face downward pressure against the U.S. dollar. The GBP/USD remains in a downward channel on the daily chart, with all moving averages indicating a bearish trend. The KD indicator shows both lines moving downward and below 50, suggesting a continued decline for the pound.
Immediate resistance levels for GBP/USD are set at 1.2900, 1.3000, and 1.3100. Support levels are found at 1.2550, 1.2450, and a critical level at 1.2350. Analysts forecast ongoing fluctuations downward for the pound against the dollar.