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.

AUD/USD consolidates above 0.7000; remains close to monthly top

AUD/USD holds steady above 0.7000 during the Asian session on Friday, trading just below the previous day's monthly low amid diverging forces. A hawkish RBA continues to support the Aussie, while the recent decline in US bond yields keeps the US Dollar depressed near a three-week low. However, oil-driven inflation fears reinforce Fed hike bets, which, along with geopolitical risks, could benefit the safe-haven buck and cap the currency pair.

USD/JPY bounces off one-month low; climbs to 157.00 amid reviving USD demand

USD/JPY rebounds from the 156.00 neighborhood, or a one-month low touched during Friday’s Asian session, with bulls looking to extend momentum beyond 157.00 amid the emergence of some US Dollar buying. Meanwhile, Japan's National CPI rose to a nine-month peak and reaffirmed BoJ rate-hike bets, which could support the Japanese Yen and cap gains for the currency pair.

Gold treads water around $4,000

Gold prices maintain its offered stance in place at the end of the week, hovering around the key $4,000 threshold per troy ounce. The persistent selling bias in the precious metal comes amid decent gains in the US Dollar and an acceptable rebound in US Treasury yields across the curve, all alongside further upside traction in crude oil prices.

Crypto Today: Bitcoin holds the 50-day EMA as Ethereum and XRP face structural resistance

Bitcoin gradually ticks up on Friday, trading above $81,000. The Crypto King has recently defended structural support near $80,000, reinforcing the prevailing bullish outlook. Ethereum similarly edges higher above $2,400, while Ripple trades above $1.32 after testing support around $1.30.

The French bond panic is overdone. Here's what the market is misreading

France's 10-year government bond yield has climbed above 5%, reigniting fears of a sovereign debt crisis in the Eurozone. With public debt exceeding €3.5 trillion, persistent budget deficits and a fragmented political landscape, investors are increasingly questioning the French government's ability to stabilize its finances.

What November 3 means for the Fed's rate path and the US Dollar

The USD faces a decisive period ahead of the November 3 midterm elections. While markets anticipate another interest rate increase from the Fed in December, the battle for control of Congress could reshape fiscal policy expectations and, indirectly, the path of US monetary policy in 2027.