GBP/USD struggles to capitalize on modest bounce from a multi-year low

GBP/USD trades with mild negative bias around 1.2200 ahead of UK/US inflation data

The GBP/USD pair attracts some sellers during the Asian session on Wednesday, albeit it lacks follow-through and remains well within the previous day’s broader trading range. Spot prices currently trade around the 1.2200 mark, down 0.20% for the day, as investors now look forward to the release of the high-impact Consumer Price Index (CPI) data from the UK and the US before positioning for the next leg of a directional move. 

The crucial CPI report would influence the Bank of England’s (BoE) and the Federal Reserve’s (Fed) interest rates outlook, which, in turn, will play a key role in determining the next leg of a directional move for the GBP/USD pair. Heading into the key data risk, the risk of stagflation – a combination of high inflation and weak economic growth – and concerns over the UK’s fiscal situation undermine the British Pound (GBP). Read more…

GBP/USD grapples with lows as key inflation data looms ahead

GBP/USD is mired in near-term technical consolidation near the 1.2200 handle as key inflation metrics from the US and UK growth figures loom large through the midweek sessions. US Consumer Price Index (CPI) inflation is expected to accelerate, though a softening in US Producer Price Index (PPI) number has sparked a fresh round of investor hopes that inflation will not only cool, but do so enough to force a fresh bout of rate cutting rhetoric from the Federal Reserve (Fed).

Headline PPI inflation rose to 3.3% YoY versus the previous figure of 3.0%, while core PPI accelerated to 3.5% YoY compared to the previous 3.4%. While both figures came in below expectations, the print wasn’t quite the boon to investor sentiment that many were hoping for as inflation pressures continue to simmer away in the background, albeit at a slightly lower boil than economists forecast. With inflation metrics still trending well above annualized Federal Reserve (Fed) targets, PPI figures printing below forecasts is a distinction without a difference when it comes to expectations of interest rate decreases. Read more…