GBP/USD retreats after US dollar recovers post-CPI losses

The US Dollar tumbled immediately after CPI data, and trims losses after Wall Street opened. Inflation confirms the US economy’s slowdown,

In a seemingly volatile session, the US dollar has sharply reversed during the last hour and turned positive across the board. The GBP/USD pair peaked after the US inflation data at 1.2244, the highest level in four weeks, and as of writing, it is trading below 1.2100, at the lowest since Monday. The pair is trading at 1.2173 at the time of writing.

Inflation data forced the US dollar to briefly decline, then the American currency recovered as equity prices in Wall Street dropped following the opening bell. The US Consumer Price Index fell in December 0.1% and the annual rate slowed to 6.5% from 7.1%, reaching the lowest level since October 2021.

Following the inflation figures, Fed’s Patrick Harker said it was time for future Fed rate hikes to shift to 25 basis points increments. His comments added fuel to the dollar’s decline as US yields further retreated.