GBP/USD holds steady post solid US jobs data, amid risk-on mood

• GBP/USD gains 0.09% driven by UK's unexpectedly high inflation rate influencing BoE policy outlook.
• Mixed US data with reduced Jobless Claims and lower Housing Starts partially bolster USD.
• Attention turns to UK Retail Sales, US Consumer Sentiment data, and potential updates from Fed speakers.

The Pound Sterling (GBP) stayed firm against the US Dollar (USD) on Thursday, courtesy of a hot inflation report on Wednesday, coughing traders by surprise, which trimmed bets the Bank of England (BoE) would ease policy as they initially expected. The GBP/USD trades at 1.2684, up 0.09%.

GBP/USD edges higher after elevated UK’s inflation report, mixed US housing data

The economic docket in the UK was absent on Thursday as GBP/USD traders brace for the release of Retail Sales on Friday. However, a tranche of US economic data underpinned the Greenback after unemployment claims slowed compared to the previous week’s data and below forecasts. Figures saw Initial Jobless Claims for the week ending January 13 at 187K, below forecasts of 207K.

Moreover, US housing data witnessed a rise in Building Permits, though Housing Starts, dropped -4.3%, from 1.525 million in November to 1.46 million in December, revealed the US Commerce Department.

On the UK front, inflation unexpectedly rose by 4% YoY from 3.9%, and underlying inflation stood at 5.1% from 4.9%. The 10-year Gilt rose 15 basis points to 3.982% after the data, while the market price out Bank of England’s (BoE) rate cuts from around an 80% chance on Tuesday to 50%.

Ahead on the docket, UK retail sales are expected to plunge -0.5% MoM and to rise 1.1% YoY. Across the Atlantic, US Consumer Sentiment by the University of Michigan (UoM) for December will be released, along with housing data, and further Fed speakers, before they enter the blackout period ahead of January’s monetary policy meeting

GBP/USD Technical Levels