The pound sterling (GBP) takes a hit, falling below 1.3400 against the US dollar (USD) as the latest UK inflation report comes in softer than expected. This comes ahead of the Bank of England's (BoE) monetary policy decision on Thursday, which is expected to result in easing measures. The US dollar, on the other hand, remains stable, with Fed officials signaling no immediate rate cuts despite positive impacts on the employment sector. The UK's Consumer Price Index (CPI) in November fell to -0.2%, missing forecasts of 0%. Year-over-year, CPI dropped from 3.6% to 3.2%, falling short of the expected 3.5% decline. These figures have led market participants to fully price in a BoE rate cut, leaving the Bank Rate at 3.75% by the end of the year. Investors are also anticipating 65 bps of cuts for 2026. The US CPI and Initial Jobless Claims data are set to be released on Thursday, with estimates suggesting a significant number of Americans have filed for unemployment benefits. The GBP/USD pair's technical outlook remains upward-to-neutral, but recent inflation data has caused a slight bearish turn. The Relative Strength Index (RSI) is still bullish, indicating further upside potential. If the pair ends the day above 1.3400, expect some sideways price action. However, a tumble below this level could lead to a fall towards the 200-day SMA at 1.3345, followed by the 1.3300 figure. This week, the British Pound has shown mixed performance against major currencies, with the strongest showing against the Australian Dollar.
