15 March 2024, GBP/USD
Events to pay attention to today:
17:00 EET. USD - Michigan Consumer Sentiment
GBPUSD:
The GBP/USD continues to slide around the mid 1.2700's in early Asian trading on Friday. The major pair is sinking to multi-day lows near the 1.2740 level, as the dollar recovers following the release of strong economic data from the US. Later in the day, traders will keep an eye on Michigan's preliminary consumer sentiment data for March, which is expected to remain unchanged at 76.9.
On Thursday, data from the US Census Bureau showed that US retail sales rose 0.6% m/m in February after a downwardly revised -1.1% gain in the previous month, missing market forecasts for a 0.8% m/m increase. The benchmark for retail sales was unchanged at 0% m/m, compared to the previous reading of a 0.3% m/m decline. In addition, the Producer Price Index rose 0.6% m/m in February, up from 0.3% m/m in January, while the Core Producer Price Index increased 0.3% m/m after rising 0.5% in January.
Stronger US producer price index data may persuade the Federal Reserve (Fed) to keep interest rates at a 23-year high for longer than expected. Fed Chairman Jerome Powell has said that a rate cut is still on the table, but Fed officials will need more inflation data before considering a cut. The narrative of high and long-term interest rates is boosting the US Dollar (USD) and acting as a headwind for GBP/USD. Investors will be keeping a close eye on the FOMC meeting, where rates are expected to remain unchanged for the fifth meeting in a row.
As for the British Pound, UK GDP growth data for January rose by 0.2% m/m, suggesting that the country is emerging from recession. Markets have pushed back expectations for a Bank of England (BoE) rate cut from June to August. Bank of England Governor Andrew Bailey said that members of the central bank have turned their attention to the question of how long they need to keep interest rates on hold, as there are some signs that restrictive policies are working to reduce inflationary pressures.
Friday will see the release of the preliminary Michigan Consumer Sentiment data. Traders will be focusing on this data ahead of next week's FOMC meeting.
Trade recommendation: Trade mainly with Sell orders from the current price level
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