The GBP/USD solidly climbs and trims two days of consecutive losses after hitting a weekly low of 1.2263 on Wednesday. Risk aversion is the game’s name, while the US Dollar (USD) is pairing some of its earlier losses, underpinned by US bond yields rising. The GBP/USD is trading at 1.2384, clinging to gains of 0.42%.
During the European session, the GBP/USD slid to the lows of the day at 1.2282 amidst news that the UK’s Producer Price Index (PPI) for December cooled the most since April 2020, which would ease pressures for the Bank of England (BoE). Input prices paid by factories dropped -1.1% MoM, while the year-over-year data dropped 1.5% from 18% to 16.5%. Regarding Output prices, it fell -0.8% MoM beneath estimates for a 0.1% gain, while on an annual basis, it fell to 14.7% from 16.2%.
Therefore, speculations that the BoE would reassess how much tightening is needed to curb inflation weakened the GBP/USD. Additionally, weaker than-estimated UK PMIs for December, revealed Tuesday, sparked recessionary fears.
Meanwhile, the greenback has continued to weaken across the G8 FX board, as shown by the US Dollar Index, down 0.15%, staying at 101.767. Contrarily, US Treasury bond yields, paired with earlier losses, sit at 3.465%.
Aside from this, traders are bracing for a busy Thursday’s round of US economic data to be unveiled. The US economic docket will feature the Advance in Gross Domestic Product (GDP) for Q4, expected at 2.6%. Further, Durable Good Orders are expected to recover to 2.5%, compared to last month’s -2.1% plunge. Unemployment claims for the last week would also be updated, along with the US Federal Reserve Core PCE inflation reading.
Therefore, with money market futures chances at 75% of witnessing a 50 bps rate hike at the BoE meeting, further GBP/USD upside is expected.
Risk Warning: Trading Forex and CFDs on margin carries a high level of risk and may not be suitable for all investors. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 77.94% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Prior to trading, you should take into consideration your level of experience and financial situation. TeleTrade strives to provide you with all the necessary information and protective measures, but, if the risks seem still unclear to you, please seek independent advice.
© 2011-2023 Teletrade-DJ International Consulting Ltd
This website is operated by Teletrade-DJ International Consulting Ltd, which is registered as a Cyprus Investment Firm (CIF) under registration number HE272810 and is licensed by the Cyprus Securities and Exchange Commission (CySEC) under license number 158/11. Teletrade-DJ International Consulting Ltd is located at 88, Arch. Makarios Avenue, 2nd floor, Nicosia Cyprus.
The company operates in accordance with the Markets in Financial Instruments Directive (MiFID).
The content on this website is for information purposes only. All the services and information provided have been obtained from sources deemed to be reliable. Teletrade-DJ International Consulting Ltd ("TeleTrade") and/or any third-party information providers provide the services and information without warranty of any kind. By using this information and services you agree that under no circumstances shall TeleTrade have any liability to any person or entity for any loss or damage in whole or part caused by reliance on such information and services.
TeleTrade cooperates exclusively with regulated financial institutions for the safekeeping of clients' funds. Please see the entire list of banks and payment service providers entrusted with the handling of clients' funds.
Teletrade-DJ International Consulting Ltd currently provides its services on a cross-border basis, within EEA states (except Belgium) under the MiFID passporting regime, and in selected 3rd countries. TeleTrade does not provide its services to residents or nationals of the USA.