GBP/USD advances modestly post BoE’s Bailey speech ahead of US CPI data
- GBP/USD's uptick influenced by Governor Bailey's comments on inflation control and stable UK employment levels.
- Expectations of BoE rate cuts and upcoming US inflation report keep the pair's movements within known ranges.
- Investors to closely monitor US CPI data and unemployment claims for further insights into economic trends.
The Pound Sterling (GBP) registers decent gains of 0.13% against the US Dollar (USD) during the North American session after reaching a daily low of 1.2670. Investors bracing for the Bank of England’s (BoE) Governor Andrew Bailey’s speech, along with the release of US inflation data on Thursday, keeps price action within familiar levels. The GBP/USD trades at 1.2724.
Pound Sterling in the driver’s seat as traders brace of US CPI report on Thursday
The BoE Governor Baley recently testified before the Treasury Select Committee during the day. He expressed that it’s important to curb inflation towards its 2% target and added that the UK hasn’t witnessed a rise in unemployment. He states household incomes have risen recently, and those factors helped ease the impact of higher rates.
Meanwhile, sources cited by Reuters expressed they expect three 25 basis points rate cuts instead of two, stating that inflation most likely fall to around 1.5% in the third quarter.
In the United States, the economic docket is relatively light, with market participants eagerly anticipating the upcoming inflation report set to be released on Thursday. The Consumer Price Index (CPI) for December is projected to increase to 3.2% year-over-year, up from 3.1% in November. In contrast, the Core CPI, which excludes volatile food and energy prices, is expected to decelerate from 4% to 3.8% year-over-year. Concurrently, the US Bureau of Labor Statistics (BLS) is scheduled to release the latest unemployment claims data for the week ending January 6.
GBP/USD Price Analysis: Technical outlook
From a technical standpoint, the pair is neutral to upward biased, with buyers unable to lift spot prices above the 1.2800 figure. In that event, the GBP/USD could aim toward the December 28 high of 1.2827, followed by the July 27 high at 1.2995. On the other hand, if bears step in and drag prices below the 1.2700 mark, that could pave the way for testing January’s 5 swing low of 1.2611, ahead of 1.2600.
