- The Pound Sterling stays strong near Tuesday’s high of 1.2450 against the US Dollar ahead of the US CPI data for January.
- Fed’s Powell stated that the central bank is in no rush to cut interest rates.
- The UK economy is expected to have contracted by 0.1% in the last quarter of 2024.
The Pound Sterling (GBP) clings to gains near 1.2450 against the US Dollar (USD) in Wednesday’s European session. The GBP/USD pair exhibits strength ahead of the United States (US) Consumer Price Index (CPI) data for January, which will be published at 13:30 GMT.
Economists expect the annual core CPI – which excludes volatile food and energy prices – to have grown at a slower pace of 3.1%, compared to a 3.2% increase in December. In the same period, the headline CPI inflation is estimated to have remained steady at 2.9%. The month-on-month headline and core CPI are expected to have risen by 0.3%.
Market participants will pay close attention to US inflation data, which will influence speculation about how long the Federal Reserve (Fed) will keep interest rates steady in the range of 4.25%-4.50%.
Fed Chair Jerome Powell said on the first day of his two-day testimony before the US Congress on Tuesday that the central bank is in “no hurry to cut interest rates”, given resilient economic growth and sticky inflationary pressures. Powell argued that reducing policy restraint “too fast or too much” could “hinder progress on inflation”.
Ahead of the US inflation data, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades slightly higher near 108.00.
Daily digest market movers: Pound Sterling gains despite BoE Mann supports for lenient financial conditions
- The Pound Sterling trades higher against its major peers on Wednesday. However, the outlook of the British economy is uncertain as Bank of England (BoE) Monetary Policy Committee (MPC) member Catherine Mann is worried about the United Kingdom (UK) demand outlook and sees the need to accommodate financial conditions.
- On Tuesday, Catherine Mann said in an interview with the Financial Times (FT) that demand conditions are quite a bit “weaker than has been the case”. Mann favored a bigger interest rate reduction in last week’s policy meeting in which the BoE unanimously decided to cut interest rates by 25 basis points (bps). Investors were surprised by Mann’s vote for a 50 bps interest rate cut as she has been an outspoken hawk. On it, Mann clarified in the interview that she wanted to communicate to traders “what we think are the appropriate financial conditions for the UK economy”.
- Meanwhile, US President Donald Trump’s international agenda will continue to keep investors in risk-sensitive assets on their toes. Donald Trump is poised to announce reciprocal tariffs after signing executive orders imposing a 25% levy on steel and aluminum imports into the US without exemptions or exclusions.
- Going forward, investors will focus on the United Kingdom’s Q4 and December month Gross Domestic Product (GDP) data, which will be released on Thursday. The UK economy is expected to have contracted by 0.1% quarter-on-quarter after remaining flat in the third quarter of 2024. On year, the economy is estimated to have expanded by 1.1% compared to the same quarter of 2023, faster than the 0.9% growth in the July-September period.
British Pound PRICE Today
The table below shows the percentage change of British Pound (GBP) against listed major currencies today. British Pound was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.10% | -0.04% | 0.66% | 0.09% | 0.17% | 0.17% | -0.20% | |
| EUR | 0.10% | 0.07% | 0.76% | 0.17% | 0.28% | 0.27% | -0.10% | |
| GBP | 0.04% | -0.07% | 0.69% | 0.11% | 0.21% | 0.21% | -0.17% | |
| JPY | -0.66% | -0.76% | -0.69% | -0.58% | -0.48% | -0.50% | -0.86% | |
| CAD | -0.09% | -0.17% | -0.11% | 0.58% | 0.10% | 0.09% | -0.28% | |
| AUD | -0.17% | -0.28% | -0.21% | 0.48% | -0.10% | 0.00% | -0.37% | |
| NZD | -0.17% | -0.27% | -0.21% | 0.50% | -0.09% | -0.00% | -0.37% | |
| CHF | 0.20% | 0.10% | 0.17% | 0.86% | 0.28% | 0.37% | 0.37% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).
Technical Analysis: Pound Sterling holds onto gains near 1.2450
The Pound Sterling trades near Tuesday’s high around 1.2450 against the US Dollar in the European session on Wednesday. However, the outlook of the GBP/USD pair remains bearish as the 50-day Exponential Moving Average (EMA) around 1.2484 continues to be a major barrier for the Pound Sterling bulls.
The 14-day Relative Strength Index (RSI) oscillates inside the 40.00-60.00 range, suggesting a sideways trend.
Looking down, the January 13 low of 1.2100 and the October 2023 low of 1.2050 will act as key support zones for the pair. On the upside, the December 30 high of 1.2607 will act as key resistance.
Economic Indicator
Consumer Price Index ex Food & Energy (YoY)
Inflationary or deflationary tendencies are measured by periodically summing the prices of a basket of representative goods and services and presenting the data as the Consumer Price Index (CPI). CPI data is compiled on a monthly basis and released by the US Department of Labor Statistics. The YoY reading compares the prices of goods in the reference month to the same month a year earlier. The CPI Ex Food & Energy excludes the so-called more volatile food and energy components to give a more accurate measurement of price pressures. Generally speaking, a high reading is bullish for the US Dollar (USD), while a low reading is seen as bearish.
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