GBP/USD: Inflation Report Could Spark a Sharp Move - Key Levels to Monitor
The GBP/USD edged higher in reaction to the firmer wages and jobs data from the UK earlier this morning, ahead of the release of even more top-tier data from both sides of the pond.
It is inflation figures from both the UK and, first, the US, which is likely to set the tone for both currencies.
Ahead of the release of the much-anticipated US CPI later today, the GBP/USD was a touch firmer, holding onto a slight gain for the week around 1.2650.
All told, consolidation was the name of the game for this pair, as traders awaited direction from the inflation data. But the cable could start trending once this week’s inflation figures are out of the way.
At the start of this and much of last week, the FX markets predominantly favored the US dollar, with the greenback maintaining support despite the absence of significant news developments.
The preceding week witnessed a robust US jobs report and several other data indicators surpassing expectations, alongside indications from Fed Chair Powell and the FOMC signalling against an early rate cut.
Nonetheless, the buoyancy in the tech sector persisted on Wall Street, culminating in the S&P 500 reaching the historic 5K milestone, largely driven by robust company earnings reports.
The strong performance of the stock market weighed on the dollar against some risk-sensitive currencies, including the Australian, Canadian, and New Zealand dollars, as well as the British pound.
However, losses for the negative-yielding Japanese yen and Swiss franc, where interest rates are among the lowest among developed economies, helped to provide some support for the dollar index.
As a result, the Dollar Index posted another, albeit small, weekly gain. The DXY closed higher in January, ending a run of
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