GBP/USD moves downward near 1.2720 ahead of UK CPI, PPI data

GBP/USD edges lower ahead of CPI, PPI data from the United Kingdom.
UK CPI (MoM) is expected to rise by 0.01%, while yearly inflation may ease at 4.4%.
US Dollar retraces its recent losses amid a dovish sentiment surrounding the Fed.

Akhtar Faruqui FXStreet

GBP/USD retraces its recent gains registered in the previous session, edging lower near 1.2720 during the Asian session on Wednesday. The GBP/USD pair receives downward pressure ahead of the slew of economic data releases from the United Kingdom (UK) on Wednesday.

UK Consumer Price Index (CPI), Producer Price Index (PPI), and Retail Price Index for November are scheduled to be released later in the day. The monthly consumer inflation is expected to grow by 0.01% from flat 0.0% prior. However, the year-on-year report could show an ease at 4.4% against the previous reading of 4.6%.

The Bank of England (BoE) maintained the policy rate at a 15-year high of 5.25% during its December meeting. Given the somber economic outlook and more relaxed conditions in the labor market, market participants factor in expectations for four rate cuts, starting from June 2024. The anticipated trajectory suggests the key rate could decrease from 5.25% to as low as 4.25% by the end of the next year.

BoE Deputy Governor Sarah Breeden expressed on Tuesday that it would be crucial for policy to remain at restrictive levels to curb inflation pressures. While emphasizing that neither scenario represented a forecast, she noted that the high inflation scenario was "clearly the more costly". Breeden's comments align with those of Governor Andrew Bailey, who has also emphasized the importance of keeping policy restrictive.

The US Dollar Index (DXY) faced a decline in the previous session, trading higher around 102.20, by the press time. The US Dollar (USD) attempts to retrace its recent losses amid a dovish sentiment surrounding the US Federal Reserve (Fed), indicating the potential for monetary policy easing in early 2024.

US Housing Starts exceeded expectations at 1.56 million, surpassing the market consensus of 1.36 million. However, Building Permits slightly fell to 1.46 million, just below the forecast of 1.47 million. Investors will likely monitor Existing Home Sales Change and the CB Consumer Confidence survey on Wednesday.

GBP/USD: additional important levels

Overview
Today last price	1.2719
Today Daily Change	-0.0006
Today Daily Change %	-0.05
Today daily open	1.2725

Trends
Daily SMA20	1.2624
Daily SMA50	1.2405
Daily SMA100	1.245
Daily SMA200	1.2509

Levels
Previous Daily High	1.2762
Previous Daily Low	1.2641
Previous Weekly High	1.2794
Previous Weekly Low	1.2501
Previous Monthly High	1.2733
Previous Monthly Low	1.2096
Daily Fibonacci 38.2%	1.2716
Daily Fibonacci 61.8%	1.2687
Daily Pivot Point S1	1.2656
Daily Pivot Point S2	1.2588
Daily Pivot Point S3	1.2535
Daily Pivot Point R1	1.2777
Daily Pivot Point R2	1.283
Daily Pivot Point R3	1.2899

Author

Akhtar Faruqui

FXStreet

Akhtar Faruqui is a Forex Analyst based in New Delhi, India. With a keen eye for market trends and a passion for dissecting complex financial dynamics, he is dedicated to delivering accurate and insightful Forex news and analysis.

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