Pound vs. Dollar: Everyone Waits for CPI
The pound sterling maintained its strength and moved steadily against the US dollar during the European session on Tuesday. GBP/USD was seen around 1.3473 (daily range 1.3462–1.3479), following a rally earlier in the week when the dollar wavered amid concerns about the Federal Reserve's independence.
The market is now holding its breath awaiting the release of US inflation (CPI) for December, scheduled for 8:30 PM WIB (1:30 PM GMT / 8:30 AM ET). This data typically serves as a short-term compass: if inflation is cooler than expected, the dollar could weaken and GBP/USD could continue to rise; if inflation is hotter, the dollar could strengthen and hold back the pound.
The current economic consensus expects US CPI to rise 0.3% (MoM) and 2.7% (YoY), while core inflation (excluding food and energy) is also projected at 0.3% (MoM) and 2.7% (YoY). However, many market participants believe the impact on near-term policy remains limited, as the Fed is expected to hold interest rates in the 3.50%–3.75% range at its January meeting.
For the pound, the context is clear: as long as the dollar remains sensitive to the combination of inflation data and the Fed's independence issue, GBP/USD has a chance to remain strong. However, the next direction will likely only truly become clear after the CPI is released—from there, the market will determine whether the dollar should strengthen further or weaken, giving the pound room to continue its upward pressure.
Source: Newsmaker.id
