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As attention switches to US inflation, GBP/USD is expected to decline to roughly 1.2500
GBP/USD is falling toward 1.2500 as the DXY gains in response to rising US inflation predictions. The DXY has maintained its ascent as the aftereffects of the positive US NFP have yet to subside. Even though BRC Like-for-Like Retail Sales were stronger than anticipated, the pound bulls did not react favorably.
In the Asian session, the GBP/USD pair has fallen below 1.2520 after feeling resistance at 1.2526. After failing to surpass the important barrier of 1.2580 on Monday, the asset is progressively dropping since then. As market players have moved their attention to the US Consumer Price Index (CPI), which is due on Friday, investors can anticipate a reduction in volatility in the cable.
A early estimate for the annual US CPI is 8.2 percent, which is somewhat less than the previous figure of 8.3 percent. A slight decline in the inflation rate will not protect the real income of American consumers. The Federal Reserve (Fed) has already announced rate rises of 25 basis points (bps) in March and 50 bps in May, but their impact on price pressures is not yet apparent.
Next week's monetary policy statement from the Fed will undoubtedly include a massive rate rise. However, the revelation of CPI numbers that exceed expectations will provide Fed officials with additional obstacles.
The opening session for the US dollar index (DXY) has been positive. The DXY is carrying over its upward trend from Monday. The positive Nonfarm Payroll data released last week is the primary driver for the DXY's stronger comeback.
Despite less-weak BRC Like-for-Like Retail Sales, the pound's bulls are not performing well. The agency has published economic statistics at -1.5%, which is better than the consensus estimate of -3.5% and the previous reading of -1.7%. Next week's most important event will be the Bank of England's (BOE) monetary policy announcement.
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