- GBP/USD regains positive traction following the drop following the previous day’s US CPI.
- Dovish Fed expectations and a positive risk tone weigh on the USD and offer support.
- Traders are now looking to the UK GDP release for fresh impetus ahead of US macroeconomic data.
The GBP/USD pair attracts some buying at lower levels during the Asian session on Thursday and reverses some of the previous day’s post-US CPI pullback from the proximity of the monthly peak. Spot prices are currently trading around the 1.2735-1.2740 region, up less than 0.10% on the day, as traders await the UK’s preliminary Q3 GDP release for fresh impetus.
Consensus estimates suggest that the UK economy expanded by 0.6% during the April-June period, slightly slower than the 0.7% increase recorded in the previous quarter. Meanwhile, UK annualised GDP growth is expected to be 0.9% compared with 0.3% in the first quarter. Against the backdrop of an unexpected fall in the UK unemployment rate, even a stronger GDP reading will signal a strengthening economy. This could complicate the Bank of England’s (BoE) plans to lower interest rates and provide a welcome boost to the British Pound (GBP).
Apart from this, investors on Thursday will take cues from the US macroeconomic data – monthly retail sales, weekly initial jobless claims, Empire State Manufacturing Index and Philadelphia Fed Manufacturing Index. The data could influence the USD price dynamics and provide a significant boost to the GBP/USD pair. Ahead of the key data, expectations of an imminent start of the Federal Reserve (Fed) rate-cutting cycle, reinforced by data indicating that inflation is on a downward trend, weigh on the USD and offer support to the currency pair.
The US Bureau of Labor Statistics (BLS) reported on Wednesday that the US headline CPI rose moderately, up 0.2% in July after falling 0.1% the previous month. Meanwhile, the annual increase in the CPI slowed somewhat and fell below 3% for the first time in nearly three and a half years, suggesting continued progress toward the Fed’s inflation targets. Investors, however, reduced expectations for more aggressive policy easing by the Fed, which, along with geopolitical risks, could help limit the USD’s downside and keep a lid on the GBP/USD pair.
Economic indicator
Gross Domestic Product (GDP)
The GDP published by National Statistics is a measure of the total value of goods and services produced by the United Kingdom. GDP is considered a broad measure of economic activity and indicates the rate at which a country’s economy is growing. A reading above expectations is bullish for the pound, while a reading below expectations is bearish.
Next post:
Thu Aug 15, 2024 06:00 (Prel)
Frequency:
Quarterly
Dear:
0.6%
Previous:
0.7%
Fountain:
Office for National Statistics
Why is it important for operators?
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
