Pound Holds Above 1.3200; Markets Await UK GDP and US PPI

The pound sterling strengthened against the US dollar during Thursday's trading (Oct 15), with the GBP/USD pair hovering around the 1.3230 level during the early Asian session. This gain occurred ahead of the release of UK economic growth (GDP) and US producer inflation (PPI) data, both of which could influence the future direction of interest rate policies in both nations.

In the United States, consumer inflation (CPI) data coming in higher than expected has reignited expectations regarding Federal Reserve (Fed) interest rate hikes. According to the CME FedWatch tool, the market assigns a 75.1% probability that the Fed will keep interest rates unchanged at its October 27–28 meeting, while anticipating approximately 79 basis points of monetary tightening through the end of 2027.

Meanwhile, Bank of England (BoE) Chief Economist Huw Pill expressed skepticism regarding market forecasts predicting four UK interest rate hikes over the coming year. His remarks suggest that the BoE is still weighing economic conditions before committing to further tightening measures.

BoE Governor Andrew Bailey also warned that prolonged geopolitical conflict could heighten inflationary pressures. Although the broader impact on inflation remains limited, some BoE officials believe additional rate hikes might be necessary if price pressures continue to mount.

Currently, the market views a 25-basis-point BoE rate hike at the November meeting as almost certain, with three additional hikes expected through September 2027. Looking ahead, GBP/USD movements will hinge on UK GDP and US PPI results, as well as shifts in expectations regarding BoE and Fed interest rate policies.