GBP/USD weakens as UK inflation cools to expectations

GBP/USD has come under renewed selling pressure following UK inflation data that showed consumer prices easing in line with market expectations. The pair declined 0.2% in early European trading as October CPI fell to 2.3% year-over-year from 2.5% previously, matching forecasts but reinforcing the disinflationary trend. Core CPI also moderated to 3.3% from 3.5%, suggesting underlying price pressures are gradually cooling. The data reduces pressure on the Bank of England to maintain restrictive monetary policy, potentially opening the door for earlier rate cuts in 2025. Technical analysis shows GBP/USD testing support at 1.2670, with a break below targeting 1.2630. Resistance remains firm at 1.2720, capping any recovery attempts. The pound's vulnerability reflects growing divergence between UK and US monetary policy outlooks, with Federal Reserve officials maintaining a hawkish stance.