GBP/USD drops to 9-week low at 1.2810 on UK food inflation surge

GBP/USD plummeted 0.8% to 1.2810, marking a 9-week low as UK food inflation unexpectedly jumped, raising concerns about persistent price pressures. The pair broke below the crucial 1.2850 support level following data showing UK food prices rose at their fastest pace in six months. This development complicates the Bank of England's policy outlook, as elevated inflation may require sustained higher interest rates despite economic growth concerns. The dollar index strengthened 0.3% to 102.80, adding to sterling's woes. Technical indicators show GBP/USD entering oversold territory with RSI at 28, suggesting a potential bounce, though the trend remains bearish. Immediate support lies at 1.2800 (psychological level), with resistance now at 1.2850 (former support turned resistance). Traders are positioning for potential BoE hawkishness at next week's meeting, though growth concerns may limit sterling's recovery potential.