GBP/USD Falls After US & UK Inflation Data


GBP/USD Analysis

The headline US Consumer Price Index moderated to 3.1% y/y in January, but core stayed at 3.9%, while all data (monthly and yearly) were above forecasts. The greenback strengthened as market are coming to accept the Fed's conservative stance around a pivot. The timing of the first cut has now been pushed back to June and markets expect rates to fall by 100 basis points by the end of the year, coming closer to the Fed's projection (of 90 bps).

Today's UK CPI report also showed persistence, as core inflation stayed at 5.1% y/y and headline at 4%y/y. Unlike the US release though, these were below estimates, while the monthly CPI contracted by 0.6%, making the biggest fall in a year. The Pound reacted lower, with markets believing these figures will allow the Bank of England to lower rates substantially. In a CNBC interview at the start of the month, Governor Bailey did not object to market pricing for 4-5 cuts this year. [1]

GBP/USD drops for second straight day, testing again the 38.2% Fibonacci, which bring 1.2307 in the spotlight. Fresh catalyst would likely be needed for this levels to challenged though.

Inflation is lower in the US and the central bank has clearly pointed to lower rates this year, whereas its UK peer sounds more hawkish and has more work to do on inflation. GBP/USD has managed to react form current levels in the recent past and may get the chance to push towards 1.2828, but does not inspire much confidence for sustained strength above it.

Nikos Tzabouras

Senior Financial Editorial Writer

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.

With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.



Retrieved 24 Jul 2024

${} / ${getInstrumentData.ticker} /

Exchange: ${}

${} ${getInstrumentData.divCcy} ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%) ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%)

${getInstrumentData.oneYearLow} 52/wk Range ${getInstrumentData.oneYearHigh}

Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interests arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed here.

Past Performance: Past Performance is not an indicator of future results.

Spreads Widget: When static spreads are displayed, the figures reflect a time-stamped snapshot as of when the market closes. Spreads are variable and are subject to delay. Single Share prices are subject to a 15 minute delay. The spread figures are for informational purposes only. FXCM is not liable for errors, omissions or delays, or for actions relying on this information.