Improved UK Growth Expectations Boost Pound
The GBP/USD exchange rate is rising this morning due to improved UK growth forecasts. Currently, the rate is around $1.2958. It has increased by 0.3% since the morning’s opening rate. The pound (GBP) continues to rally after a strong GDP report and anticipation of UK inflation data.
UK Inflation Data Crucial for Pound’s Direction
This week starts with limited data, leaving Sterling without clear direction. Investors await the UK inflation data due on Wednesday. The focus key phrase “UK inflation data” appears frequently in discussions about the pound’s potential movements. If the CPI remains at 2%, it may confirm expectations of an August rate cut from the Bank of England (BoE). Core inflation is also forecasted to hold at 3.5%, the lowest since October 2021.
UK Jobs Data and Retail Sales in Focus
Thursday will see the release of the UK’s latest jobs data. Unemployment is expected to stay at 4.4%, nearly a three-year high. Signs of a slack labor market could pressure the BoE to start its monetary unwinding cycle. Retail sales, expected to decline by 0.2% in June, will be released on Friday. If data meets forecasts, the GBP may end the week negatively.
US Dollar Struggles with Easing CPI
The US dollar (USD) faces challenges following cooler-than-expected US inflation data. Federal Reserve interest rate cut expectations are increasing. This affects the ‘greenback’ ahead of the US producer price index release. Signs of sticky producer prices could support the USD. However, a speech from Fed Chair Jerome Powell could influence USD rates, especially if his tone remains dovish.
Anticipated US Economic Data
Next week, the Fed Chair’s speech may impact USD exchange rates. If Powell maintains a dovish stance, the USD might weaken. Similarly, a speech from Fed policymaker Mary Daly could drive volatility. US retail sales data will be released on Tuesday. A forecasted stall in consumer spending could weigh on the ‘greenback’. Later, initial jobless claims data could further undermine USD if claims stay high.
