- GBP/USD is juggling in six-pips as investors are expected to create positions post US Inflation data.
- For Fed’s neutral stance, a spree of a slowdown in price pressures is required.
- The UK's GDP is expected to remain vulnerable ahead.
The GBP/USD pair is displaying topsy-turvy moves in a range of 1.2079-1.2085 after a mild recovery from a low near 1.2070. Investors have preferred to remain on the sidelines ahead of the US Consumer Price Index (CPI) data, which is highly expected to surprise the market participants this time.
The investing community is aware of the fact that soaring oil prices remained responsible for driving the price pressures to the sky. Now, fixed supply worries and a gloomy demand outlook on the oil front resulted in a steeper fall in oil prices. And, its multiplier effect will be witnessed in the inflation rate.
The street estimates are indicating a decent drop in the plain-vanilla inflation rate by 40 basis points (bps) to 8.7% from the prior release. Whereas, the core CPI that doesn’t inculcate oil and food prices is expected to elevate to 6.1% from the prior release of 5.9%.
For the Federal Reserve (Fed) to remain calm and turn neutral, a series of drops in the cost-push inflation is desired. A one-time slowdown in the price pressures won’t be enough to trim the journey towards the neutral rate, however, exhaustion signals would delight Fed policymakers.
On the UK front, the Gross Domestic Product (GDP) is expected to land at -0.2% vs. 0.8% in the prior release. And, the annual data is indicating a downward shift to 2.8% against the prior release of 8.7%. Also, the estimates for Manufacturing Production data are not displaying a rosy picture. The economic data is likely to tumble to 1.3% from the former print of 2.3%. This may keep the pound bulls on the back foot.
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