GBP Slips Against USD as US Inflation Data Revives Fed Rate Hike Bets

The Pound Sterling's fortunes took a hit on Friday as it slipped against the US Dollar in response to fresh data showing sticky inflation pressures in the United States. The core Personal Consumption Expenditures (PCE) price index, a key gauge of long-term inflation trends favored by the Federal Reserve, rose at a pace exceeding economist forecasts.

This development has revived bets on further interest rate hikes from the Fed, which could attract foreign capital and boost the value of the US Dollar. As a result, the GBP/USD pair came under pressure, reversing some of its gains made earlier in the week.

The immediate market reaction saw the US Dollar index (DXY) climb, while the GBP/USD pair fell from its recent trading range. From a technical analysis perspective, the pair is now testing a key support level, which could open the door for further downside if broken.