The pound has broken a four-day winning streak and is awaiting new momentum | 15 August 2024

Events to watch out for today:

09:00 GMT+3. GBP - GDP Volume Change

15:30 GMT+3. USD - Change in retail trade volume

GBPUSD:

GBP/USD retreated and fell below 1.28500 on Wednesday after Consumer Price Index (CPI) inflation fell on both sides of the Atlantic, breaking the Pound's four-day winning streak. Traders will be awaiting UK gross domestic product (GDP) growth data and US retail sales.

UK GDP growth for the quarter is expected to fall to 0.6% from a previous reading of 0.7%, while UK GDP year-on-year is expected to rise to 0.9% from a previous reading of 0.3%. In the US, retail sales for the month are expected to rise to 0.3% after 0.0% in June.

US CPI inflation came in at 2.9% y/y in July, slightly below the expected 3.0%. Core inflation also fell to 3.2% y/y from the previous reading of 3.0%. Both core and core monthly CPI rose 0.2% mom in July, exceeding forecasts of 0.15% and 0.17% for core and core CPI, respectively.

Despite the decline in consumer inflation, investors were expecting an even lower reading following this week's US Producer Price Index (PPI), which showed a greater reduction in producer-level price pressures. However, it appears that the reduction in price pressures is not being passed on directly to consumers. According to CME's FedWatch tool, the betting markets currently estimate the probability of a double rate cut by the Federal Reserve (Fed) on September 18 at only 40%, down from 50% at the start of the week and 70% the previous week.

The UK Consumer Price Index rose year-on-year in July but fell short of average market forecasts, coming in at 2.2% versus the expected 2.3%. This figure is still above the previous reading of 2.0%, while the core inflation index fell to 3.3% from the previous reading of 3.5%.

Trading recommendation: Trade mainly with buy orders at the price level of 1.2850. We consider sell orders at the price level of 1.2810.

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