GBP/USD trades sideways above 1.2600 amid quiet session

The GBP/USD pair trades sideways around 1.2622 during the early Asian session on Friday. The market is likely to be mute in light trading on Good Friday. Later in the day, the US Core Personal Consumption Expenditures (PCE) Price Index will be released. The Fed’s preferred inflation gauge is estimated to remain stable at 2.8% YoY.

The Pound Sterling (GBP) remains under some selling pressure after the economic data showed that the UK economy went into recession in the second half of 2023. The nation’s Gross Domestic Product (GDP) contracted by 0.3% QoQ in the fourth quarter, unchanged from preliminary estimates. However, the GDP numbers did not impact expectations for monetary policy, as investors already factored in a mild recession late last year. 

Additionally, the higher speculation that the Bank of England (BoE) will begin three quarter-point reductions in rates this year undermines the GBP. The BoE Governor Andrew Bailey said that interest rate cuts will be ‘in play’ at future BoE policy meetings.

On the other hand, the US economy remained robust in the fourth quarter of last year. This, in turn, provides some support to the Greenback and drags the GBP/USD pair lower. The final US Q4 GDP came in better than expected, growing 3.4% from the previous 3.2% estimate. Meanwhile, the weekly Initial Jobless Claims for the week ended March 22 were at 210K from the previous reading of 212K. Finally, the March Michigan Consumer Sentiment Index was upwardly revised to 79.4, above the preliminary estimate of 76.5.