GBP/USD breaks 1.2850 as US inflation fuels September Fed cut bets

GBP/USD advanced 0.9% to 1.2865 following weaker-than-expected US inflation data that virtually guaranteed a Federal Reserve rate cut in September. US CPI decelerated to 2.9% annually while core inflation eased to 3.2%, both missing estimates and pushing market-implied probability of a September cut to 98%. Sterling found additional support from relatively hawkish Bank of England positioning, with UK rates expected to remain higher for longer compared to US rates. The pair broke through key resistance at 1.2850, opening the path toward 1.2920 (August high). Technical indicators turned bullish with MACD crossing above signal line and RSI entering overbought territory at 68. Immediate support sits at 1.2820, coinciding with the broken resistance level. The widening UK-US rate differential could propel cable toward 1.3000 if US data continues disappointing and the BoE maintains its cautious stance on rate cuts.