Pound Rolls Over at 1.3459 as US Inflation Revives the Dollar, but BoE Hawks Keep a 1.3520 Target Alive

GBP/USD started Tuesday flat, sitting at 1.3445 through the Asian session as the market waited for the US October inflation report. Early in London the dollar slipped and cable reached 1.3459, the best level of the session and the top of a move that began Monday. That rally added 0.50% on Monday on risk-on flows and pulled the pair back above 1.34 after last week’s 0.31% drop to 1.3351, a loss that came even though the Bank of England raised rates. The early gains did not survive the European morning. Hawkish comments from Fed Governor Christopher Waller sent the pair negative near 1.3430 before the US data. Then the Consumer Price Index came in hot on both headline and core, and the bid faded completely. At the time of writing GBP/USD trades at 1.3396, 63 pips under the session high and back below the 200-day exponential moving average near 1.3400. The pound has stayed under that average for most of the time since September 17.

The move belongs to the dollar, not the pound. UK news on Tuesday did not change. Bank of England speakers kept leaning hawkish, and the domestic data calendar was empty until Thursday’s September GDP release. All of the damage came through the US rates channel. The 2-year Treasury yield jumped 19 basis points to 4.736%, the dollar index rose 0.3% to 102.00 after an earlier low of 101.408, and pricing for the December 9 FOMC moved from a routine 25bp hike to an open debate about 50bp. Futures now give 85% odds to 25bp and 15% to 50bp. Before the report, the 50bp case had zero.

This is the same pattern as October 14. That day a hot US September CPI pushed GBP/USD to 1.3140, just under 1.3150, its lowest level since late November 2025. The low wiped out the entire climb from the late-June base to the August 21 peak just below 1.3700, which printed at 1.3676. Since then cable has rebuilt to the 1.34 area, helped by the BoE hike and a surprise drop in UK unemployment. Tuesday’s question is whether the pound can hold that rebuilt ground now that the Fed may out-tighten the BoE in December. The tape’s first answer is no: price broke back below the moving-average cluster, and the bounce ran into supply at 1.3459 and rolled over.

The October CPI Numbers That Did the Damage

The Bureau of Labor Statistics October CPI release beat expectations across the board. Headline CPI rose 0.4% month over month against a 0.3% forecast. Core CPI, which excludes food and energy, rose 0.3% against 0.2%. That is the third straight core reading at 0.3% and the fifth this year, so core inflation has been running at that pace for three months and has not cooled. Annualized, 0.3% a month is roughly 3.6%, close to double the Fed’s 2% target.

The breakdown shows why the report hurt the pound more than a simple beat would. Shelter rose 0.3%, so housing costs are still adding steady pressure. Food jumped 0.5%. Energy rose 0.7%, with gasoline up 1.0%, which ties US inflation directly to the oil market: Brent closed at $89.62 and WTI at $84.38. The only meaningful offset was used cars, down 1.2%. That decline is narrow and volatile, and it says nothing about the broad services inflation the Fed cares about most.

There is no clean year-over-year rate in this report, because the 2025 government shutdown left a gap in the index history. That forces the market to trade the monthly prints alone, and the monthly prints read hot. Each 0.3% core figure lifts the expected peak policy rate, which lifts short-dated Treasury yields, which pulls money into the dollar and away from currencies whose central banks have less room to keep tightening.

For GBP/USD the timing matters. The pound’s rebound since mid-October rested on the view that the BoE was the more hawkish of the two central banks. It hiked on November 5 while the Fed stayed in a gradual, data-dependent mode. Tuesday’s print challenges that view directly. If the Fed is hiking in December and possibly by 50bp, the policy-path advantage moves back to the dollar. The pound got smoked on that shift, not on anything that happened in London.

The next test is Friday’s Producer Price Index. A hot PPI would confirm that pipeline pressure is still building and support the case for a larger December move. Then come the Fed minutes on November 18, which will show how many officials were already leaning toward more aggressive tightening before this report landed.

Waller, Logan and the 50bp Question

What made Tuesday different from previous hot prints was the Fed commentary that came before the data. Waller set the terms early in the European session: if core inflation runs around 0.3%, he said, the committee should consider a 50bp move. When core then printed exactly 0.3%, his condition was met, and the market priced the larger move accordingly. The pound turned negative on his comments before the BLS numbers were released, which shows how sensitive cable is to any hint that the Fed will move faster.

Dallas Fed President Lorie Logan added to the pressure. She called for two more hikes and flagged a faster pace of tightening over the winter. Two hikes from the current range, starting December 9, would put the upper bound at 4.50% by early 2027 if they are taken at 25bp each. Combined with a 50bp December option, the range of outcomes for US policy has shifted higher in a single session.

The 15% probability on a 50bp December hike is a small share of the distribution, but it went from 0% to 15% in one report. That is the kind of repricing that sets the direction of currencies. Traders do not have to believe 50bp will happen to buy dollars. They only need the risk of it to be live, because it raises the expected path of US short rates and makes holding dollar deposits more attractive than holding sterling at the margin.

The Fed also has a reason to front-load. The December 9 decision arrives one day before the November CPI report on December 10. Policymakers will decide without the next inflation print, so the October data and the PPI are the most recent evidence they will have. A committee that has watched three straight core prints at 0.3% has less reason to wait. That raises the odds that the December statement and projections lean hawkish even if the hike is only 25bp.

For cable, the Fed rhetoric turns every US data release between now and December 9 into a potential catalyst for the downside. Friday’s PPI, retail sales, and weekly jobless claims will each be read through the 50bp lens. A soft print would let the pound recover toward 1.3459. A firm one would extend the fall toward the 50-day EMA near 1.3350 and last Friday’s 1.3351 close.

The Rate Gap Flips: Fed vs BoE at 4.00%

For most of 2026 the rate differential between London and Washington mattered less than the difference in the two banks’ direction of travel. Now both matter. After the November 5 BoE hike, Bank Rate stands at 4.00%. The Fed’s upper bound is also 4.00%. For the first time in this cycle the two policy rates are level, and the gap that matters is the expected one: who hikes next and by how much.

A 25bp Fed hike on December 9 would take the federal funds range to 4.00–4.25%, putting the US upper bound 25bp above Bank Rate. A 50bp move would put it at 4.50%, 50bp above, and the BoE would need to deliver two hikes just to catch up. The BoE’s next decision is December 17, eight days after the Fed. The market has to price a period in which the dollar carries the higher yield, followed by an uncertain BoE response.

Money markets have also been pricing further UK tightening. On October 29, after the budget, they fully priced the November hike and expected a second increase by February. The BoE is projected to move, but more slowly than the Fed is now being priced. When one central bank is expected to hike faster and sooner, its currency usually leads, and that is what drove Tuesday’s selling in GBP/USD.

The 2-year Treasury yield at 4.736% is the clearest gauge of the US side. It rose 19 basis points on the day, a large one-session move for the front end, and it now sits well above Bank Rate and the current fed funds ceiling. That spread reflects expected hikes, not only the current setting. On the UK side, the 2-year gilt usually moves with BoE pricing. It needs the December 17 meeting or a strong UK data run to keep pace with Treasuries.

Rate differentials explain why cable could not hold 1.3459. The pound rallied on Monday partly because the dollar softened ahead of CPI, which narrowed expected spreads. After the print those spreads widened again in favor of the dollar. As long as the US 2-year holds above 4.70%, rallies in GBP/USD are likely to be sold. A drop back below 4.60% on soft PPI or retail sales would be the first sign the spread pressure is easing.

What the BoE Hike on November 5 Bought the Pound

The Bank of England raised Bank Rate from 3.75% to 4.00% on November 5. It was the bank’s first hike since 2023, and the vote was 8-1. That is a sharp change from September 17, when the Monetary Policy Committee held with a 6-3 split. The shift from a divided hold to a near-unanimous hike in seven weeks tells the market the committee sees inflation as a real threat rather than a temporary energy shock. The bank’s monetary policy summary and minutes set out the reasoning: the conflict in the Middle East has pushed up energy prices, and domestic price pressures have not eased enough to absorb that shock.

The hike did not lift the pound. GBP/USD lost 0.31% in the week of the decision and closed Friday at 1.3351. That reaction says the move was priced well ahead of time. On October 29 money markets had already fully priced a November hike, so the decision confirmed expectations without adding anything new. Currencies trade on surprises, and an 8-1 vote for a fully priced hike was not one.

What the hike did buy was a floor under expectations. With the BoE now tightening, the market cannot price easing for the pound in the near term, and that limits how far sterling can fall against currencies whose central banks are still on hold. This is the reason the pound has outperformed the euro. The hike gives sterling a carry floor, but against the dollar that floor only holds while the Fed stays slower than the BoE. Tuesday’s CPI cracked that condition.

Governor Andrew Bailey has kept the hawkish message in place. He said upside inflation risks remain a concern, which signals the bank is ready to move again. That support did not stop the sell-off on Tuesday, but it puts a clear limit on how far the pound can fall on rate arguments alone. If the BoE were signalling a pause, cable would be testing 1.3300 already. Instead it is holding just under 1.3400 against a broad dollar bid, which shows the November hike is still doing some work.

The 8-1 vote also matters for December. A committee this united has room to act again on December 17 if the November 18 CPI or the November 17 labour data come in hot. That gives the pound a clear path back to the upside, and it is the main reason the bullish target remains in play despite Tuesday’s damage.

Lombardelli, Breeden and the December 17 Meeting

The BoE’s messaging this week has leaned hawkish, which is helping to cap the pound’s losses. Deputy Governor Clare Lombardelli said she would not rule out a rate hike in December. That is a direct signal that the December 17 meeting is live and that November was not a one-off. For a central bank that held 6-3 two months ago, a deputy governor publicly keeping a back-to-back hike on the table is a meaningful shift, and it gives sterling bulls a reason to defend the 1.3350–1.3300 zone.

Deputy Governor Sarah Breeden was scheduled to speak on Tuesday. Breeden has generally been one of the more cautious voices on the committee. Any sign from her that she also sees December as live would extend the hawkish front and help the pound recover toward 1.3459. If she stresses data dependence and the drag from higher gilt yields, the market would read it as a split between the hawks and the moderates, and cable would lose another layer of support.

The December decision runs on a short timeline. The bank will see the September GDP release on November 12, the October labour market data on November 17, and October CPI on November 18, all at 07:00 UK time. All three land before the meeting, so the committee will have a full read on inflation, jobs and growth. A run of firm numbers would push December pricing close to a full hike, and with the Fed already priced for December, a matched BoE move would neutralise much of the rate-gap damage done on Tuesday.

The risk is that the UK data comes in mixed. September CPI was 3.5%, so October has to stay at or above that level for the hawks to carry the committee. A drop back toward 3.2% would give the doves the argument they need for a pause, and the pound would face the worst possible combination: a Fed hiking in December and a BoE holding.

The bank’s internal debate is the key swing factor for cable over the next five weeks. The US side is mostly priced: 85% for 25bp and 15% for 50bp. The UK side is not. That asymmetry means UK data has more scope to move GBP/USD than US data does from here, which is why the November 17–18 releases matter more for the forecast than anything else on the calendar.

UK Inflation at 3.5% and the Services Problem

The Office for National Statistics reported that UK consumer price inflation rose to 3.5% in September, up from 3.1% in August and above the 3.4% forecast. Fuel prices were the main driver, with the Middle East conflict pushing energy costs higher. Services inflation came in at 3.7%, and core inflation also beat expectations. Those two measures matter most for the BoE, because they track domestic price pressure rather than imported energy shocks.

Services inflation at 3.7% is the central problem. The BoE has long watched services as the clearest signal of wage-driven inflation. Services output is labour-heavy, so prices there move with pay. With regular pay growth at 3.7%, services inflation at 3.7% fits a labour market still passing wage costs on to prices. That is the pattern a central bank tightens against, and it is why the committee moved from a 6-3 hold to an 8-1 hike.

The jump from 3.1% to 3.5% also shows how quickly energy feeds into UK headline inflation. Higher fuel prices raise transport and distribution costs across the economy. With Brent at $89.62, oil is near the levels that drove the September jump, so there is little relief coming from energy in the October data. That points to another firm print on November 18, which would support a December hike.

For GBP/USD, UK inflation works both ways. Higher inflation pushes the BoE toward hikes, which supports the pound through rates. But inflation driven by energy is a cost-of-living squeeze that weakens real incomes and growth, which hurts the currency over time. The market has mostly rewarded the rates channel this year. The pound fell to its 2026 low of 1.3140 on October 14 because US inflation was hotter, not because UK inflation was weak.

The October CPI on November 18 is the most important UK data point before the December meeting. A headline print at or above 3.5% with services holding near 3.7% would keep the December hike in play and support a recovery toward 1.3459 and 1.3520. A drop in services inflation below 3.5% would undercut the hawks and leave cable exposed to the 1.3300 and 1.3200 supports. US CPI hit sterling on Tuesday. UK CPI next week decides whether that hit holds.

Labour Market: 4.7% Unemployment and 3.7% Pay

The most recent ONS labour market release delivered a clear upside surprise. Unemployment fell to 4.7% in the three months to August, against a 4.9% forecast and the lowest rate since July 2025. Employment rose by 102,000. Regular pay growth, which excludes bonuses, came in at 3.7% against a 3.6% forecast. Vacancies stood at 691,000. The data sparked an October 20 rally in GBP/USD from 1.3300 to just above 1.3400, the first meaningful recovery from the October 14 low.

Not every number was strong. The claimant count rose by 30,300, well above the 19,400 expected. Claimant figures track benefits claims and can diverge from the survey-based unemployment rate. An increase this size suggests some weakness at the margins, even as the headline jobless rate fell. The BoE weighs both, but the combination of falling unemployment and firm pay carried more weight in the November decision than the claimant jump did.

Pay growth at 3.7% is the figure the committee watches most closely. It runs in line with services inflation and well above the roughly 3% pace consistent with the 2% inflation target once productivity is factored in. As long as regular pay holds near 3.7%, the BoE has a clear case to keep tightening. A drop toward 3.2% in the November 17 release would weaken that case and bring the doves back into play for December 17.

Lower unemployment also helps the pound through the growth outlook. A labour market adding 102,000 jobs is not one heading into recession, and that lowers the risk of a sudden shift to easing. That stability is part of why EUR/GBP has fallen below 0.8400. Investors prefer a tightening central bank backed by firm employment over one tightening into weakness.

The November 17 release covers the three months to September. It will show whether the August improvement was a trend or a one-off. Another fall in unemployment with pay at or above 3.7% would set up a strong week for sterling ahead of CPI the next day. A rebound in unemployment toward 4.9% and softer pay would push cable toward the 1.3300 support zone built on October 20, and could open a full retest of the 1.3140 low.

Gilts at 5.3% and the Post-Budget Calm

UK government bond yields have shaped the pound all year, and the gilt market has calmed since its peak. The 10-year gilt hit 5.53% on October 8, its highest level since July 2007, and the 30-year briefly traded above 6%, a level last seen in 1998. On September 1 the 10-year closed at 5.21% and the 30-year at 5.85%, with GBP/USD closing at 1.3516 that day. The rise in yields since then reflected sticky inflation, rate-hike pricing, and concern about public borrowing, which reached £24.5 billion in September and topped forecasts.

Chancellor John Healey’s first budget, delivered October 28, changed the tone. The budget met the government’s borrowing rules, preserved £15 billion of fiscal headroom, and included a debt-sale plan in line with forecasts. Gilts rallied. The 10-year fell to 5.29% on October 29, its lowest level since September, and has stayed below its October peak since. Borrowing and debt forecasts were revised higher across the outlook, but the market accepted the plan because it stayed inside the rules. The Office for Budget Responsibility forecasts behind the budget gave investors a credible fiscal path.

Gilt yields affect the pound in two directions. When yields rise because the market expects more BoE hikes, sterling usually strengthens, since higher returns attract capital. When yields rise because of fiscal fear, sterling weakens, since investors sell both bonds and the currency. The October 8 peak combined both, and cable sold off into the October 14 low. The post-budget rally removed the fiscal fear, which is why the pound could recover even as gilt yields came down.

Gilts have also held up relatively well. Since Andy Burnham became prime minister, UK yields have risen less than those in several other major bond markets, reflecting comparatively stronger confidence in the UK fiscal outlook. That matters for sterling because it reduces the risk of a repeat of the sharp gilt-driven sell-offs that have hit the pound in past episodes.

The risk now runs through Treasuries. The 10-year US yield is at 4.99% and the 30-year at 5.29%. Gilts follow Treasuries closely, so a renewed sell-off in US bonds after the CPI could push gilt yields back toward 5.4–5.5%. If that rise comes from imported US pressure rather than BoE pricing, it is negative for sterling: UK borrowing costs go up without any rate-differential benefit. The UK Debt Management Office auction calendar is worth tracking, because weak demand at long-dated gilt sales would be the earliest warning that fiscal risk is returning.

Dollar, Treasuries and the 2-Year at 4.736%

The dollar is the main driver of GBP/USD right now, and the US data stack supports it. The 2-year Treasury yield rose 19 basis points to 4.736% on Tuesday, the 10-year traded at 4.99%, and the 30-year at 5.29%. The dollar index rose 0.3% to 102.00 after touching 101.408 earlier in the session, a full reversal of the pre-CPI dip that had lifted cable to 1.3459. On October 14 the index peaked near 102.84, its highest level since April 2025, as cable hit its 2026 low. The index is now 84 points below that peak, and the pound is 256 pips above its low.

The rest of the dollar complex confirms the move. EUR/USD fell to 1.1184. Gold dropped toward $4,050 and closed at $4,053. Equities sold off: the S&P 500 lost 0.71% to 7,496.17, the Nasdaq dropped 0.87% to 25,034.07, and the VIX rose to 21.06. That is a classic higher-for-longer response, with rate-sensitive assets falling and the dollar catching a bid. When the dollar rises against everything at once, GBP/USD is trading the US side of the pair, and UK fundamentals take a back seat until the dollar move fades.

The US political backdrop has shifted too. The midterms gave Democrats control of both chambers, and Senator Elizabeth Warren is expected to chair the Senate Banking Committee from January 2027. That points to more congressional scrutiny of the Fed and the financial sector, but it does not change the inflation math driving December. For now the market is trading the Fed path, not Washington politics.

The front-end Treasury yield is the single most useful signal for cable traders over the next week. The 2-year at 4.736% has priced in most of the December hike and part of the 50bp risk. If Friday’s PPI and other data push it above 4.80%, the market is moving toward full 50bp pricing, and GBP/USD would likely break the 1.3350 support. If the 2-year slips back below 4.65%, the 50bp tail is fading, and cable has room to recover toward 1.3459.

The US Treasury daily yield curve data and the FOMC calendar frame the window. The dollar has the momentum after Tuesday, but its index is still below the October high, which tells you the move has not yet turned into a full-scale breakout. That gap leaves room for the pound to stabilize if UK data stays firm.

EUR/GBP Under 0.8400 Shows Where Sterling Strength Lives

Against the euro, sterling has been strong. EUR/GBP has dropped below 0.8400, its lowest level since May 2025. The cross shows the pound’s relative strength more cleanly than GBP/USD, because it removes the dollar effect. A currency outperforming its closest neighbour is rewarding local fundamentals: a tightening central bank, a labour market adding jobs, and a fiscal plan that passed the market’s test.

The two central banks are now on similar paths. ECB Governing Council member Joachim Nagel called a December hike obvious despite energy relief, so the euro also has a tightening story. EUR/GBP’s slide shows the market sees the BoE as more committed, or the UK data as firmer, and that it is pricing more for sterling than for the euro. With UK unemployment at 4.7% and services inflation at 3.7%, the BoE case looks stronger on the numbers.

For GBP/USD this cross matters because it shows the pound is not broken. If sterling were falling on UK weakness, EUR/GBP would be rising alongside the drop in cable. Instead the cross is near a 17-month low while cable falls, which confirms Tuesday’s move is a dollar story. That distinction drives the forecast. A dollar-led sell-off usually reverses when the US data cools, while a sterling-led sell-off tends to persist. The current one is the first kind.

The cross also helps with timing. Steady EUR/GBP declines alongside a stable GBP/USD would signal broad sterling demand that can carry cable higher once the dollar stalls. A sharp EUR/GBP bounce above 0.8450 would warn that the UK story is weakening, and that the pound could lose ground on both fronts. The November 17–18 UK data will likely decide which way the cross breaks.

With EUR/USD at 1.1184 and both European currencies under pressure from the dollar, the euro is falling faster than the pound. That relative resilience is why GBP/USD is holding near 1.3396 instead of extending toward 1.3300. When the dollar bid eventually fades, the pound is better placed than the euro to recover, and that supports the upside target as a medium-term case.

Positioning: Shorts Trimmed, Not Flipped

Speculative positioning in the pound has shifted, but it has not turned. The CFTC Commitments of Traders data shows speculators trimmed their net sterling shorts in recent weeks, following the October 20 jobs rally and the November 5 BoE hike. That is a move toward neutral, not a bullish bet. The market still holds more short exposure than long, so it is not yet positioned for a sustained sterling rally.

That positioning shapes how cable reacts to news. With shorts reduced, the pound has less fuel for a short-squeeze rally: the easy covering has already happened, which is part of why Monday’s 0.50% gain stalled at 1.3459. At the same time, the remaining shorts leave room for a second wave of covering if UK data surprises on the upside next week. Firm CPI on November 18 could trigger it, pushing cable through 1.3459 quickly.

The CME futures contract, 6B, reflects these flows. Open interest and positioning in sterling futures show whether new money is entering on rallies or whether moves are just covering. A rally to 1.3459 driven by covering, with open interest falling, is weaker than one driven by fresh longs. Monday’s move looked more like covering, which fits the quick reversal on Tuesday.

The dollar side of positioning matters as much. After the October 14 peak near 102.84, dollar longs eased as the index fell back toward 101.408. Tuesday’s CPI gave those longs a reason to rebuild. If speculators return to the dollar ahead of the December 9 FOMC, the pressure on GBP/USD will grow, and the pair could break the 1.3350 support on positioning alone, without any new UK news.

The setup leans modestly bearish for the near term. Sterling shorts are smaller, so the downside is not overcrowded, while dollar longs are building again. That combination favors a grind lower toward 1.3350 and possibly 1.3300 over the next two weeks rather than a sharp collapse. The upside scenario needs a catalyst strong enough to turn positioning outright long, most likely a hot UK CPI combined with soft US PPI.

Daily Chart: 200-Day EMA at 1.3400 Is the Battle Line

The daily chart puts GBP/USD right at its key decision zone. The 200-day EMA sits near 1.3400 and the 50-day EMA near 1.3350. Both have been falling since September 17, when the pair broke below them. Tuesday’s drop to 1.3396 put price back under the 200-day after Monday’s rally lifted it above. The 100-day simple moving average had given the pair a constructive bias before the CPI, and holding near it is the bulls’ first job. A daily close below 1.3400 would confirm the averages are acting as resistance, not support.

Overhead, the first level is Tuesday’s 1.3459 high, where the rally failed. Above that, 1.3500 is a round-number pivot. Next comes 1.3516, the September 1 close. The August 21 high at 1.3676 is the major target, and the 52-week high at 1.3869 sits beyond it. The upside target for this forecast is 1.3520. It sits just above the September 1 close and marks the level where the pair would recover the full gilt-driven sell-off of September and October. Reaching it needs a daily close above 1.3459 and then above 1.3500.

Below, 1.3350 is the 50-day EMA and also last Friday’s 1.3351 close, which makes it a double support. Under that, 1.3300 is the base from which the October 20 jobs rally started. Then 1.3200 is the floor of the late-September range. The 2026 low at 1.3140, from October 14, is the line that would confirm a new downtrend. The 52-week low at 1.3037 is the final support for the yearly range.

The structure since October 14 is a recovery from 1.3140 through a series of higher lows: 1.3300 on October 20, then 1.3351 on Friday. As long as the pair holds above 1.3350, that pattern of higher lows is intact and the October low looks like a cycle bottom. A daily close below 1.3350 would break the sequence and open 1.3300. A break below 1.3300 would put 1.3200 and 1.3140 back in play.

Momentum favors the downside. The falling EMAs and the rejection at 1.3459 show sellers still in control above 1.34. The bounce from 1.3140 has been steady but corrective, and has not reclaimed the averages with any conviction. Bulls need a close above 1.3459 to change that. Until then the chart points to a test of the 1.3350–1.3300 support zone, where the pair will likely meet buyers ahead of the November 17–18 UK data.

GBP/USD Verdict: Bearish Below 1.3460, Upside Target 1.3520

GBP/USD is bearish in the near term. The October US CPI printed 0.4% headline and 0.3% core. Waller opened the door to a 50bp December hike. The 2-year Treasury yield jumped 19bp to 4.736%. With the Fed and BoE both at a 4.00% upper bound, a December 9 Fed hike would give the dollar the yield advantage eight days before the BoE meets on December 17, and that shift sent cable from 1.3459 back to 1.3396. Rallies toward 1.3459 should be sold while the pair stays below that level. Near-term targets are 1.3350, the 50-day EMA and last Friday’s close, then 1.3300, the October 20 base. A break below 1.3300 opens 1.3200 and the 2026 low at 1.3140. The pound itself is not broken: EUR/GBP below 0.8400 shows real sterling strength, the BoE hiked 8-1 on November 5, Lombardelli has kept December live, UK unemployment sits at 4.7% with pay at 3.7%, and gilts have calmed near 5.3% since the budget. That gives a clear path back up. A hot UK labour report on November 17 and October CPI on November 18 that holds near 3.5% with services near 3.7%, combined with a soft US PPI on Friday, would push the pair through 1.3459 and 1.3500 toward the 1.3520 upside target, with 1.3676 as the extended target. The bearish view is invalidated by a daily close above 1.3460. A daily close below 1.3140 would turn the medium-term outlook outright bearish toward the 52-week low at 1.3037.

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