GBP/USD Adjusts Amid UK Economic Data Release, BoE’s Policy Outlook, and US Dollar Dynamics
The GBP/USD pair has retraced some of its recent gains, registering a slight downturn to 1.2720 in the Asian session on Wednesday. The pair faces a downward trajectory as market participants await a series of key economic reports from the United Kingdom (UK), including the Consumer Price Index (CPI), Producer Price Index (PPI), and Retail Price Index for November.
Forecasts indicate a marginal increase in monthly consumer inflation, while the annual CPI is expected to show a slight deceleration to 4.4%.
During its December meeting, the Bank of England (BoE) maintained its policy rate at a 15-year peak of 5.25%. With a cautious economic outlook and easing labour market conditions, expectations are set for a series of rate cuts starting from June 2024, potentially reducing the key rate to 4.25% by year-end.
BoE Deputy Governor Sarah Breeden reiterated the necessity of maintaining a restrictive policy stance to mitigate inflationary pressures. Echoing Governor Andrew Bailey’s sentiments, she highlighted the high costs associated with persistent inflation.
In the US, the Dollar Index (DXY) slightly recovered, trading around 102.20. The US Dollar is attempting to regain ground amid expectations of a dovish shift in the Federal Reserve’s monetary policy as early as 2024. Housing Starts in the US exceeded forecasts, while Building Permits displayed a marginal dip. The market’s focus now shifts to upcoming data on Existing Home Sales Change and the Consumer Confidence survey.
GBP/USD Technical Outlook
From a technical perspective, the GBP/USD pair recently achieved a notable rally, surpassing the 1.2720 level. This upward movement suggests a resumption of the bullish trend within the observed bullish channel, with potential targets at 1.2790 and 1.2880.
The market may experience some sideways fluctuations due to stochastic indicators, but maintaining above 1.2790 is crucial for the continuation of the bullish momentum. The anticipated trading range for today lies between 1.2650 support and 1.2810 resistance, with a bullish trend expected for the day.
GBP/USD Live Chart
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