British Pound extends losing streak against US Dollar, US PPI in focus

The British Pound (GBP) continues its downward trend against the US Dollar (USD) for a fourth consecutive trading day on Friday. The GBP/USD pair reaches close to 1.3227 as the US Dollar maintains its strength, driven by expectations of a faster Federal Reserve (Fed) tightening cycle. The US Dollar Index (DXY), which measures the Greenback's value against six major currencies, hovers near its 19-month peak of 103.24, set on Thursday.

Analysts at National Bank of Canada (NBC) note that the Dollar remains buoyed by persistent inflation and the likelihood of further Fed tightening. Following October's pause, another strong Consumer Price Index (CPI) report strengthens the expectation for tighter monetary policy before the year ends. A deterioration in global risk appetite could also bolster safe-haven demand.

Fed Governor Christopher Waller hinted at a potential half-point rate hike in December if October's core CPI inflation exceeds 0.3%. The Fed's apparent inclination toward additional tightening, given the "too high" inflation and recent adverse data, suggests a bias towards further rate hikes to curb price increases. Investors will closely monitor the US Producer Price Index (PPI) data for October at 13:30 GMT, as well as the British labor market figures for September and the UK CPI data for October.

Currently, GBP/USD trades at 1.3226, trading below the 20-period exponential moving average (EMA) at 1.3337, acting as immediate resistance. The RSI at 39.9 remains below the neutral 50, indicating ongoing downside pressure despite a lack of oversold conditions. The 20-day EMA at 1.3337 represents the first resistance level, and a daily close above this level may help alleviate the present bearish sentiment and facilitate a more sustained recovery.