Pound Tumbles on Hot US Inflation Reviving Fed Rate Hike Bets

The British Pound (GBP) slipped against the US Dollar (USD) on Friday following hotter-than-expected US inflation data, measured by the Personal Consumption Expenditures (PCE) price index. The core PCE price index rose more than forecast in the latest monthly reading, signaling that price pressures remain stubbornly elevated.

This prompted traders to reprice the likelihood of further monetary policy tightening by the Federal Reserve, a scenario that typically strengthens the dollar by offering higher yields to investors.

The immediate reaction in the foreign exchange market was a sharp move against the Pound. The GBP/USD pair dropped to its lowest level in several weeks as the dollar index climbed.