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The 1.24 region is the target for the bulls in the GBP/USD market. The most important US inflation data will be released on Friday for traders. The GBP/USD exchange rate was last up 0.65% at 1.2391 after fluctuating between a low of 1.2293 and a high of 1.2392. at the time of writing, the pair is trading at 1.2389. This puts the pair on course to post its largest monthly gain since November as market worries about the banking industry waned and the safe-haven US Dollar took a hit.
In March, the Great British Pound gained over 3% against the US Dollar and is currently breaking past resistance to reach eight-week highs. Headline inflation in Britain is still over 10% and not showing any signs of abating. Money market data indicates that traders now believe rates will peak at 4.5% by September, indicating that the Bank of England is likely planning one more quarter-point increase.
The BoE anticipates a swift fall in inflation throughout the year. Yet as of now, inflation risks are more to the upside according to economic indicators. If inflation does prove to be more enduring than the BoE anticipates, the pound will likely suffer even more as a result of its very dovish position.
Traders will be watching Friday’s personal consumption expenditures (PCE) reading for February. The favoured inflation indicator of the Fed is the data. January figures showed a sharp acceleration in consumer spending so the data will be closely eyed.
On Thursday, US data showed that jobless claims last week rose more than expected from the week before indicating a cooling labor market, while fourth-quarter Gross Domestic Product growth was slightly lower at 2.6% compared with earlier estimates of 2.7%, both supporting the case for a softer Fed policy.
