Pound Hits 5-Week High. Can UK CPI Push It Higher?

VG Markets · 2026-10-21T02:41:48Z

The pound is back in focus.

GBP/USD climbed to around 1.33, hitting a five-week high after stronger-than-expected UK labour data boosted expectations for a Bank of England rate hike in November. Markets are now pricing in a near-full 25bp hike.

Now comes the bigger test: UK inflation.

September CPI is due today, with inflation already running well above the BoE’s 2% target. Meanwhile, surging energy prices are adding another layer of inflation pressure.

Can Sterling Keep Climbing?

A hotter-than-expected CPI reading could strengthen the case for further BoE tightening and give the pound another boost.

For GBP/USD, 1.33 is the first level to watch. A sustained break above it could open the door to further gains.

But if inflation comes in softer than expected, some of the recent rate-hike bets could quickly unwind.

The pound has already made a strong move. UK CPI could decide whether the rally has more room to run.

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