- GBP/USD bounces from its weekly lows and recovers to the 1.2300 level on the weakness of the US dollar.
- The UK Producer Price Index cools off, sparking speculation that the Bank of England may tighten monetary policy, albeit not as aggressively as anticipated.
- The US economic calendar for Thursday will include GDP, jobless claims, durable goods orders and core PCE.
The GBP/USD It rises solidly and pared two days of consecutive losses after hitting a weekly low of 1.2263 on Wednesday. Risk aversion is the name of the game as the US dollar (USD) is paring some of its previous losses, propped up by rising US bond yields. GBP/USD is trading at 1.2384, holding on to gains of 0.42%.
UK Producer Price Index eases ahead of next week’s Bank of England meeting
During the European session, GBP/USD fell to daily lows at 1.2282 amid news that the UK Producer Price Index (PPI) for December had cooled the most since April 2020, which would ease pressures for the Bank of England (BoE). Input prices paid by factories fell -1.1% month-on-month, while year-on-year data fell 1.5% to 16.5% from 18%. Producer prices fell -0.8%m/m, below estimates for a 0.1% rise, while year-on-year they fell to 14.7% from 16.2%.
Therefore, speculation that the Bank of England would reassess the degree of tightening needed to curb inflation weakened GBP/USD. In addition, the weaker-than-expected UK PMIs for December, released on Tuesday, sparked recession fears.
Meanwhile, the dollar has continued to weaken on the G8 currency board, as shown by the Dollar Index, which fell 0.15% to hold at 101.767. By contrast, US Treasury yields trim previous losses and stand at 3,465%.
Apart from this, traders are preparing for a busy round of US economic data to be released on Thursday. The advance of the Gross Domestic Product (GDP) for the fourth quarter will be published on the US economic agenda, which is expected to stand at 2.6%. In addition, Durable Goods Orders are expected to recover to 2.5%, compared to the -2.1% drop last month.
GBP/USD Key Technical Levels
|Last price today||1.2382|
|Today I change daily||0.0047|
|today’s daily variation||0.38|
|today’s daily opening||1.2335|
|previous daily high||1.2414|
|previous daily low||1.2263|
|Previous Weekly High||1.2436|
|previous weekly low||1.2169|
|Previous Monthly High||1.2447|
|Previous monthly minimum||1.1992|
|Fibonacci daily 38.2||1.2321|
|Fibonacci 61.8% daily||1.2356|
|Daily Pivot Point S1||1.2261|
|Daily Pivot Point S2||1.2187|
|Daily Pivot Point S3||1,211|
|Daily Pivot Point R1||1.2412|
|Daily Pivot Point R2||1.2488|
|Daily Pivot Point R3||1.2562|
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.