- Ahead of November's US inflation data, the British pound is moving in a narrow range against the US dollar around 1.2750.
- Economists expect the Fed to cut rates by 25 basis points after its December 18 policy meeting.
- Investors are awaiting the UK's monthly GDP statistics to find out the current state of the economy.
In London trading on Wednesday, the British pound (GBP) was trading in a narrow range against the US dollar (USD) around 1.2750. The GBP/USD pair has been firm as investors appear to be holding back ahead of November US Consumer Price Index (CPI) data to be released at 13:30 GMT.
The inflation report is expected to show that the annual headline CPI accelerated at a fast pace to 2.7% from the previously announced 2.6%. Core CPI, which excludes volatile food and energy prices, is expected to rise steadily to 3.3%. Month-on-month headline CPI and core CPI are expected to rise by 0.3%.
Inflation data is unlikely to affect the Fed's interest rate forecasts at its Dec. 18 policy meeting unless the data deviates significantly from expectations.
According to the latest Reuters poll, 90% of economists expect a 25 basis point (bp) rate cut next week. The survey also found that a majority of economists expect the Fed to suspend policy easing from its first policy meeting in 2025 (January), as President-elect Donald Trump's import tariff hikes and tax cuts will cause inflation. It also became clear that
Daily Digest Market Trends: British Pound Focused on US Inflation
- Like the US dollar, the British pound is also struggling for direction against other major currencies amid a weaker UK economic calendar. The UK currency will therefore be influenced by market expectations of the Bank of England's (BoE) expected interest rate policy at its December 19 policy meeting.
- Traders expect the BoE to keep interest rates on hold at 4.75% next week as price pressures continue. Prior to the central bank's policy decision, employment statistics for the three months ending in October and consumer price index (CPI) statistics for November are scheduled to be released, which could have an impact on the central bank's interest rate forecasts.
- Meanwhile, growing concerns about the strength of Britain's labor market could force central bank officials to guide interest rates dovishly. A recent survey by the Bank of England's Decision-Making Committee (DMP) showed that job growth expectations for the year ahead have fallen to a four-year low.
- Later this week, investors will focus on the UK's October gross domestic product (GDP) and industrial and manufacturing production data. GDP and factory data indicate the current state of economic health. Economists expect factory and gross domestic product data to expand after falling in September.
British pound PRICE today
The table below shows the percentage change of the British Pound (GBP) against major currencies today. The British pound was the strongest against the New Zealand dollar.
| USD | EUR | GBP | JPY | CAD | australian dollar | new zealand dollar | swiss franc | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.21% | 0.19% | -0.23% | 0.07% | 0.34% | 0.36% | 0.15% | |
| EUR | -0.21% | -0.02% | -0.41% | -0.14% | 0.13% | 0.15% | -0.06% | |
| GBP | -0.19% | 0.02% | -0.41% | -0.12% | 0.16% | 0.17% | -0.04% | |
| JPY | 0.23% | 0.41% | 0.41% | 0.29% | 0.57% | 0.58% | 0.37% | |
| CAD | -0.07% | 0.14% | 0.12% | -0.29% | 0.28% | 0.30% | 0.08% | |
| australian dollar | -0.34% | -0.13% | -0.16% | -0.57% | -0.28% | 0.02% | -0.20% | |
| new zealand dollar | -0.36% | -0.15% | -0.17% | -0.58% | -0.30% | -0.02% | -0.21% | |
| swiss franc | -0.15% | 0.06% | 0.04% | -0.37% | -0.08% | 0.20% | 0.21% |
The heat map shows the percentage change between major currencies. The base currency is selected from the left column and the quote currency is selected from the top row. For example, if you select British Pounds from the left column and move along the horizontal line to US Dollars, the percentage change displayed in the box represents GBP (Basic)/USD (Quote).
Technical analysis: GBP moves above 20-day EMA
Sterling is trying to regain a key resistance level against the US dollar at 1.2800. The GBP/USD pair remains slightly above its 20-day exponential moving average (EMA) around 1.2720.
The 14-day Relative Strength Index (RSI) ranged between 40.00 and 60.00, suggesting a sideways trend.
Looking down, the pair is expected to find a cushion near the upward trendline around 1.2500, plotted from the October 2023 low around 1.2035. On the upside, the main resistance will be the 200-day EMA near 1.2830.
economic indicators
Consumer price index (excluding food and energy) (year-on-year change)
Inflationary or deflationary trends are measured by periodically summing the prices of a representative basket of goods and services and expressing that data as the Consumer Price Index (CPI). CPI data is compiled monthly and released by the government. US Department of Labor statistics. Measurements for the same month of the previous year compare the product prices in the base month with the same month of the previous year. CPI Ex Food & Energy excludes so-called more volatile food and energy components to more accurately measure price pressures. Generally, higher readings are considered bullish for the US dollar (USD), while lower readings are considered bearish.
