Pound Sterling recovers losses against US Dollar as US inflation rose expectedly.

The Pound Sterling ticks higher to near 1.2770 against the US Dollar after the US inflation data rose expectedly in November.
Economists expect the Fed to cut interest rates by 25 bps after the policy meeting on December 18.
Investors await the UK monthly GDP data to get cues about the current status of the economy.

The Pound Sterling (GBP) recovers intraday losses and edges higher to near 1.2770 against the US Dollar (USD) in Wednesday’s North American session. The GBP/USD pair moves higher after the release of the United States (US) Consumer Price Index (CPI) data for November, which showed that inflationary pressures rose in line with expectations.

The inflation report showed that the annual headline CPI accelerated at a faster pace to 2.7%, as expected, from the October reading of 2.6%. The core CPI – which excludes volatile food and energy prices – grew steadily 3.3%. The month-on-month headline and core CPI rose expectedly by 0.3%.

Sticky US inflation data has boosted expectations that the Federal Reserve (Fed) will reduce its key borrowing rates by 25 basis points (bps) to 4.25%-4.50 in the policy meeting on December 18.

According to the latest Reuters poll, 90% of economists expect that there will be a 25-basis points (bps) interest rate reduction next week. The poll also showed that a majority of economists expect the Fed to pause the policy-easing spree from the first policy meeting of 2025 in January, assuming that policies of higher import tariffs and lower taxes by US President-elect Donald Trump will be inflationary.