GBP/USD awaiting US GDP data for Q4 | 28 February 2024

Events to pay attention to today:

15:30 EET. USD - Gross Domestic Product

17:30 EET. USD - EIA Crude Oil Stocks Change

GBPUSD:

In the early Asian session on Wednesday, the GBP/USD pair is trading below the psychological 1.2700 mark in a narrow range. Later today, the US GDP growth data for the fourth quarter will be released.

On Tuesday, US durable goods orders for January fell 6.1%, worse than the market's forecast of a 4.5% drop and following a 0.3% decline in December. New orders for goods, excluding the defence sector, rose by 0.1% for the month, in line with expectations. The Conference Board's US consumer confidence index came in at 106.7, below the market consensus forecast of 115.0.

Investors are betting that the first rate cut will come at the June meeting, compared to expectations of a rate cut as early as March, according to CME FedWatch Tool data. The US Personal Consumption Expenditures (PCE) index for January is set to be released on Thursday. This release may provide insight into the trajectory of inflation over time. The PCE inflation rate is expected to rise to 0.3% m/m in January, up from 0.2% in December.

However, Bank of England (BoE) Deputy Governor Dave Ramsden stated on Tuesday that inflationary pressures persist, and he requires more data on their duration before altering the BoE's policy stance. The Bank of England predicts that inflation will reach its 2% target in Q2 2024, but it will subsequently increase to 2.75% later this year. Financial markets anticipate that the UK central bank will begin reducing interest rates in August.

Market participants will be closely monitoring the US fourth-quarter (Q4) annualised gross domestic product data and the preliminary merchandise trade balance. Traders will focus on this data to identify trading opportunities in the GBP/USD pair.

Trading recommendation: We follow the level of 1.2650 and trade from it on the rebound.

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