Pound Slips as Sticky US Inflation Revives Fed Rate Hike Bets

The British Pound slipped against the US Dollar on Friday after hotter-than-expected US inflation data led to renewed bets that the Federal Reserve could hike interest rates again. The core PCE price index, the Fed's preferred measure of inflation, rose more than forecast in the latest monthly reading, signaling persistent price pressures.

This prompted traders to reprice the likelihood of further monetary policy tightening by the US central bank, a scenario that typically strengthens the dollar. The GBP/USD pair dropped to its lowest level in several weeks as the dollar index climbed.

The sell-off reflects a recalibration of interest rate expectations, with futures markets now showing a higher probability of a Fed rate hike at the next policy meeting than before the data release.