GBP/USD edges lower to 1.3120 as soft UK CPI boosts BoE easing outlook

• GBP/USD dips from 1.3154 to 1.3120 as markets brace for November 26 Autumn Budget risks.
• UK CPI falls to 3.6% and core CPI to 3.4%, prompting renewed confidence the BoE will cut rates in December.
• Traders await Fed minutes and Thursday's NFP, with September jobs expected at 50K and key US data resuming next week.

The GBP/USD edges modestly lower on Wednesday as inflation in the UK ticked lower in October, increasing the chance of a possible interest rate cut by the Bank of England (BoE). At the time of writing, the pair trades at 1.3120 after reaching a peak of 1.3154.

Sterling eases after CPI cools further, boosting expectations for an 85%-probability rate cut ahead of next week's Autumn Budget

The Office for National Statistics (ONS) revealed that the Consumer Price Index (CPI) dipped from 3.8% to 3.6% YoY as expected. Core CPI slipped from 3.5% to 3.4% YoY, its lowest since March. Sterling dipped as investors grew confident that the BoE may reduce borrowing costs at the December meeting.

The Pound could take a hit next week with the release of the Chancellor Rachel Reeves Autumn Budget, on November 26.

Money markets had priced in an 85% chance of a quarter of a percentage rate cut, according to LSE data.

In the US, Initial Jobless Claims for the week ended October 18 rose by 232K, which triggered no reaction in the financial markets. Besides traders waiting for the release of the Fed's last meeting minutes, they are laser focused on Thursday Nonfarm Payroll figures for September, which are expected to come at 50K, up from August's 22K print.

The US Census Bureau announced that it would publish September Retail Sales and Durable Goods Orders, next week.

Ahead, Fed officials Governor Stephen Miran, and regional Fed Presidents John Williams and Thomas Barkin, would cross the wires.

GBP/USD Price Forecast: Technical outlook

Technically speaking, the GBP/USD reached its lowest level five days, at 1.3092, an indication that the downtrend continues. Momentum is bearish as depicted by the Relative Strength Index (RSI).

If GBP/USD cracks below 1.3100, the next support would be the last cycle low of 1.3010, hit in early November. Conversely, if buyers clear the 20-day SMA At 1.3173, the next key resistance in play would be 1.3200.