The GBP/USD Remains Limited Below 1.2470 as Attention Turns to US Data

The GBP/USD pair trades on a subdued note on Thursday morning during early Asian trading hours, around 1.2450. The Pound Sterling (GBP) is depreciated against the Greenback as a result of the anticipation that the Bank of England (BoE) will commence interest rate reductions in the near future, sparked by the weaker UK inflation data. Investors will be more influenced by Thursday's release of Existing Home Sales, the Philadelphia Fed Manufacturing Index, and weekly Initial Jobless Claims for the United States.

The BoE alluded to the fact that an interest rate cut remains imminent in the United Kingdom, citing recent data indicating that the economy's price growth has slowed even further. The Office for National Statistics (ONS) reported on Wednesday that inflation as measured by the UK Consumer Price Index (CPI) fell to 3.2% in the twelve months leading up to March, the lowest level in twenty-five months. The value decreased by 3.4% compared to the previous reading. Investors anticipate the initial rate reduction to occur in August or September, as indicated by LSEG data.

Earlier this week, optimistic February Retail Sales data indicated a robust economy in the United States, which bolstered the USD. There was speculation that the Federal Reserve (Fed) might postpone its easing cycle this year in response to the report. Fed Chair Jerome Powell stated that, in the wake of unexpectedly high inflation readings, he will delay a rate cut for a longer period of time than was previously anticipated. Powell further stated that prior to reducing financing costs, the US central bank will likely require additional time to develop confidence that price growth is approaching the 2% target set by the Fed. This subsequently limits the upside potential of the GBP/USD pair and offers some support to the US dollar.