14 August 2024, GBP/USD
Event to watch out for today:
09:00 GMT+3. GBP - Consumer Price Index
15:30 GMT+3. USD - Consumer Price Index
GBPUSD:
The Pound-Dollar pair is declining during the Asian session on Wednesday and is moving away from the two-week high around 1.2870-1.2875 reached the previous day. However, the decline remains subdued as traders await the release of the latest consumer inflation data in the UK and the US with interest.
The UK Consumer Price Index will play a key role in the Bank of England's (BoE) monetary policy decision and will boost the British Pound (GBP). In addition, the all-important US CPI report will be closely scrutinized for signs that the Federal Reserve (Fed) is about to cut rates, which in turn should provide a meaningful boost to the US Dollar (USD) and help determine the next stage of directional movement for the GBP/USD pair.
Ahead of the release of important macroeconomic data, the British Pound may continue to receive some support from the UK data released on Tuesday, which showed an unexpected drop in the unemployment rate. This largely overshadowed a 135k jump in the number of people claiming unemployment benefits in July and a sharp slowdown in wage growth from 5.7% y/y to 4.5% in the three months through June.
On the other hand, the US Dollar is undermined by expectations of more Fed interest rate cuts, supported by Tuesday's softer-than-expected US Producer Price Index (PPI). In addition, the overall positive risk sentiment is keeping USD bulls on the defensive, which should serve as a tailwind for GBP/USD. Thus, any significant corrective decline could be seen as a buying opportunity and remain limited.
Trading recommendation: Watch the level of 1.2870, and on a consolidation above it take Buy positions. On the rebound take Sell positions.
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