English
GBP/USD Remains Well Supported Above The 1.2700 Area, While The US Dollar Gains Ground
GBP/USD remains above the 1.2700 region despite a stronger Dollar. The Consumer Price Index (CPI) for the United Kingdom exceeded expectations. According to the FOMC Minutes, inflation remained unacceptably high and additional monetary policy tightening may be required. The US Initial Jobless Claims, the Philadelphia Fed Manufacturing Survey, and the UK Retail Sales will be closely monitored by investors.
During Thursday's early Asian session, the GBP/USD pair remains well supported above 1.2700 despite its inability to advance. The likelihood of a subsequent tightening cycle by the Federal Reserve (Fed) pushes the US Dollar Index above 103.50, the greatest level since June. Currently, the key pair is trading near 1.2717, down 0.12% on the day.
On Wednesday, the UK's National Statistics reported that the country's Consumer Price Index (CPI) MoM came in at -0.4%, exceeding the market consensus of -0.5% and compared to the previous reading of 0.1%. Annually, British CPI inflation rose 6.8% in June, in line with expectations. The core CPI, which excludes volatile energy and food prices, rose 6.9% in July, exceeding the 6.8% forecast. The Retail Price Index (RPI) for July in the United Kingdom was -0.6% MoM and 9.0% YoY. The Bank of England (BoE) could be persuaded to raise interest rates further by data from the United Kingdom that exceeded expectations.
Over the Atlantic, the hawkish statement from the FOMC Minutes and the optimistic data from the United States boost the US Dollar slightly. However, according to the Federal Open Market Committee (FOMC) Minutes, inflation remained unacceptable. The Fed official perceived significant inflationary risks, and it may be necessary to tighten monetary policy further to achieve the long-term inflation target.
Industrial Production in the United States increased 1.0% in July, exceeding market expectations of 0.3% and a previous decrease of 0.8%. Building Permits increased from 1.44 million to 1.44 million in July, while Housing Starts increased from 1.39 million to 1.45 million, exceeding expectations of 1.48 million. Both the Change in Building Permits and the Change in Housing Starts surpassed market expectations as well as previous readings. In turn, this strengthens the U.S. dollar and functions as a headwind for the GBP/USD pair.
In the coming week, market participants will focus on the US Initial Jobless Claims report for the week ending August 11 and the Philadelphia Fed Manufacturing Survey for August, both of which are scheduled for release later in the American session. On Friday, the focus will transfer to the UK Retail Sales report for July. The monthly figure is anticipated to decline by 0.5%.
Bonus rebate to help investors grow in the trading world!
