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As the GBP/USD Pair Struggles to Gain Ground above 1.2800, Attention Turns to UK GDP Data
GBP/USD remains limited below the 1.2800 barrier in Wednesday's Asian session due to the higher USD. February saw an increase of 0.4% MoM and 3.2% YoY in the US CPI; the Core CPI rose by 0.4% MoM and 3.8% YoY. The United Kingdom (UK) is experiencing a decline in its annual compensation growth rate from November 2023 to January 2024.
The GBP/USD pair maintains its position below the psychological barrier of 1.2800 during Wednesday's early Asian trading hours. The major pair falls as the US Dollar (USD) strengthens in response to the US CPI inflation data for February. Investing investor. Investors are awaiting the January British GDP growth rate, which is anticipated to be 0.2% MoM. Currently trading near 1.2795, the GBP/USD has gained 0.02% on the day.
The Consumer Price Index (CPI) reported a 0.4% month-over-month and 3.2% year-over-year increase in February for the United States, the Bureau of Labor Statistics reported on Tuesday. The monthly CPI figure was consistent with market expectations, whereas the annual figure deviated from the 3.1% market consensus. Excluding volatile food and energy costs, the Core CPI increased by 0.4% month-over-month and 3.8% year-over-year, exceeding expectations.
The more robust-than-anticipated CPI inflation figures could potentially persuade policymakers of the Federal Reserve (Fed) to postpone initiating interest rate reductions until at least the summer. Recently, Fed officials have underscored the probability that interest rates will be reduced at some juncture this year; however, they advise against hasty reactions in the fight against inflation. Investors will further analyze the February Retail Sales report, which is anticipated to increase 0.8% month-over-month, on Thursday. In light of the robust Retail Sales data, additional repricing of anticipation may ensue in the wake of the CPI inflation report for February.
Tuesday's data from the Office of National Statistics (ONS) indicated that the United Kingdom's (UK) annual wage growth rate is declining. From November of the previous year to January 2024, the average earnings including bonuses in the United Kingdom decreased to 5.6% from 5.8% in the previous estimate, while annual wage growth excluding bonuses fell to 6.1% from 6.2% previously. The data led to a slight increase in wagers regarding rate cuts by the Bank of England (BoE) this year; traders now anticipate three rate cuts this year.
Subsequently, on Wednesday, traders will closely monitor the monthly construction output, goods trade balance, manufacturing production, and UK gross domestic product for January. The focus will be on the US Retail Sales for February on Thursday.
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