The pound has been out of favor in recent sessions after Bank of England Governor Mark Carney hinted that the BoE is considering loosening monetary policy. The prospect of lower interest rates dragged the pound southwards. Fears of a rate cut were then fueled further by weak GDP data which showed that the UK economy performed much worse than expected, contracting -0.3% in November.
Today the UK economic calendar will remain under the spotlight as investors look towards the release of inflation data, as measured by the consumer price index. Analysts are predicting that consumer prices remained steady in December increasing 0.2% month on month and 1.5% on an annual basis. Core inflation which excludes food and fuel is forecast to remain steady at 1.7% year on year. Both these readings would be below the BoE’s 2% target.
US consumer price growth moderated at the end of last year, according to the latest data. US inflation increased 0.2% month on month in December, less than the 0.3% forecast. On an annual basis inflation increase 2.3%, up from 2.1% year on year in November.
Pound,After sliding for the past five sessions, the pound surged higher versus the US dollar on Tuesday. GBPUSD moved back above the key 1.3000 levels psychological level to reach a high of 1.3033. The pair closed slightly off the high. The pound is advancing versus the US dollar in early trade on Wednesday.UK CPI rises 1.3% YoY in December vs. +1.5% expected.(Opens in a new browser tab)
Today attention will be firmly on trade as US and China are due to sign the trade deal that they agreed in December. However, news that the US will not remove tariffs on Chinese imports until after 2020 US elections as dented sentiment ahead of the signing.