GBP/USD, DAX Forecast: Two trades to watch

GBP/USD unchanged despite UK inflation jumping to an 11-month high

GBP/USD hovers below 1.34, around a monthly high, following hotter UK inflation data and amid a flat U.S. dollar.

Data from the ONS showed that UK CPI rose to 3.5% year-on-year in September, up from 3.1% in August and above expectations of 3.4%, amid rising fuel costs. Diesel prices reached a record high, while oil rose above $100 a barrel.

Core inflation, which strips out more volatile items such as food and fuel, also moved higher to 2.8%, up from 2.6%, and came in ahead of expectations of 2.7%.

Services inflation rose for the first time since April, reaching 3.7%, up from 3.4%, suggesting that inflationary pressures are spreading through the economy. This is a figure that Bank of England policymakers will be looking at closely.

The data reinforces expectations that the Bank of England will hike interest rates by 25 basis points on November 5. However, it has done little to change the outlook for future meetings, following yesterday's stronger-than-expected UK labour market data, which had already supported rate hike expectations.

For this reason, the pound has remained relatively unmoved by the inflation data.

Investors are also weighing up public finance data, the final update ahead of Chancellor John Healey's budget next week.

The figures showed that September net borrowing came in higher than expected at £24.5 billion. This was £1.8 billion more than in September 2025 and £1.9 billion above the Office for Budget Responsibility's forecast.

The deficit for April to September widened to £97.8 billion, £6 billion more than the OBR predicted.

Government debt has exceeded £3 trillion for the first time. Combined with hotter-than-expected inflation, this makes for a difficult backdrop ahead of the budget.

Meanwhile, the U.S. dollar is broadly unchanged, trading around a three-week low.

The dollar has come under pressure, tracking Treasury yields lower in recent weeks after a sell-off in tech stocks drove a rotation into safe-haven Treasuries.

Still, the U.S. dollar remains broadly supported by expectations that the Federal Reserve will hike rates again before the end of the year, while elevated oil prices are keeping inflation expectations in focus.

The U.S. economic calendar is quiet today, with attention instead on U.S. tech earnings. University of Michigan consumer confidence data is due on Friday.

GBP/USD forecast – technical analysis

GBP/USD has broken out of a holding pattern, pushing above its 50 EMA before running into resistance at the 200 EMA around 1.3400. Although the pair has pulled back slightly, it remains above its 50 EMA and descending trendline, making the near-term outlook more constructive.

Buyers will look for a break above the 200 EMA resistance at 1.3400 to gain traction and open the door towards 1.3500, the psychological level, followed by 1.3650.

Immediate support is seen at 1.3350, where the descending trendline meets with the 50 EMA. Below here, attention turns to horizontal support at 1.3300, followed by 1.3280, the July 24 low. A break below this level would expose the 1.3200 support zone, which has been significant throughout 2026.

DAX steady as Space-X revives the AI trade but oil limits gains

The DAX, together with other European indices, has opened relatively flat as investors weigh up encouraging earnings from SpaceX and Super Micro against elevated oil prices, which are weighing on sentiment.

Impressive earnings from SpaceX and Super Micro are helping to revive the AI trade, with AI hardware stocks recovering.

SpaceX is rising 9% pre-market after Q3 earnings came in well ahead of expectations across its divisions. SpaceX reported Q3 net income of $4.1 billion, compared with a $1.1 billion loss in the same period last year. Total revenue was also significantly above Wall Street estimates at $14.6 billion.

Meanwhile, Super Micro lifted its quarterly revenue outlook by 27% on strong AI demand, helping shares jump 15% after hours.

These results are helping to revive optimism towards the AI trade after jitters last week over the huge costs involved in the AI buildout, how it will be financed and when the investment will generate returns, particularly in a high-interest-rate environment.

However, the upside is being capped by concerns over rising oil prices. Brent trades above $110 a barrel, keeping inflation worries elevated and the prospect of further rate hikes on the table.

DAX forecast – technical analysis

The DAX found support at the 200 EMA and has risen, breaking out of its falling channel, but gains have run into resistance at 25,500, the 50 EMA. The index therefore remains caught between the 200 EMA and the 50 EMA, while the RSI is neutral.

Buyers will need to break above the 50 EMA at 25,500 to bring 25,800 into focus, the mid-September high. Above here, attention turns to 26,500 and 26,600, which would mark fresh record highs.

On the downside, sellers will need to break below the 200 EMA around 24,950 to gain traction, bringing 24,660, the July low, into focus. Below here, attention turns to 24,000, a level last seen in June.