GBP/USD gains traction above the mid-1.2700s, US CPI data looms
11.01.2024, 02:11

GBP/USD gains traction above the mid-1.2700s, US CPI data looms

  • GBP/USD extends the rally to 1.2760 amid the risk-on mood.
  • New York Federal Reserve (Fed) President Williams speaks on the 2024 economic outlook.
  • BoE Governor Andrew Bailey said that he hoped that the recent fall in the cost of mortgages would continue.
  • Traders will closely focus on the December US Consumer Price Index (CPI) on Thursday.

The GBP/USD pair gains momentum above the mid-1.2700s during the early Asian session on Thursday. The US Dollar (USD) weakness and risk-on environment lend some support to the major pair ahead of the key US inflation data, due later on Thursday. GBP/USD currently trades around 1.2760, up 0.21% on the day.

Late Wednesday, New York Federal Reserve (Fed) President Williams spoke on the 2024 economic outlook. Williams said that US interest rates will need to remain high "for some time" until central bank authorities are sure that inflation will return to the 2% target. According to the WIRP, the markets have priced in 5% odds of a rate cut on January 31 and nearly 70% possibility of rate cuts on March 20. This, in turn, might exert some selling pressure on the Greenback and act as a tailwind for the GBP/USD pair.

The Bank of England (BoE) Governor Andrew Bailey said on Wednesday that he hoped that the recent fall in the cost of mortgages would continue. However, the BoE Governor has given no hints regarding the path of interest rates, as he reaffirmed the need to bring inflation down. Meanwhile, an external member of the BOE’s Financial Policy Committee, Jonathan Hall stated on Wednesday that exuberance as interest rates fall and growth recovers is one of the biggest risks to financial stability this year.

Market players will focus on the December US inflation data, as measured by the Consumer Price Index (CPI), due later on Thursday. On Friday, the UK Manufacturing Production, Industrial Production, and monthly Gross Domestic Product for November will be released. These figures could give a clear direction to the GBP/USD pair.

 

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