Pound Stuck at 1.34, Market Awaits US Data Bomb
GBP/USD remained stagnant above 1.3400 on Thursday, as traders preferred to await key US data before taking large positions. The pair's movement tended to be sideways for the second consecutive day, especially in the Asian session.
The US dollar gradually gained ground after trade war concerns eased. Trump's comments withdrawing tariff threats against several European countries regarding Greenland helped calm the market, allowing the "Sell America" trend to subside and giving the dollar room to strengthen slightly.
The market's primary focus now turns to US data: the PCE Price Index (the Fed's favorite inflation indicator) and the final release of US GDP for the third quarter. These two data figures are crucial because they could alter market expectations regarding the Fed's future interest rate direction.
If the PCE and GDP come out stronger, the market could judge that the Fed doesn't need to cut interest rates aggressively. This typically supports the dollar and makes GBP/USD more difficult to rise, as the dollar becomes more expensive.
In the UK, the pound has also yet to receive a strong boost due to the Bank of England's mixed policy direction. Recent data shows UK inflation is starting to rise again, but the market remains uncertain about the BoE's stance throughout the year.
ONS data shows that UK CPI rose to 3.4% (YoY) in December, the first increase in five months. This figure makes the likelihood of a BoE interest rate cut at its meeting early next month appear slimmer.
However, the market continues to consider the scenario of the BoE cutting interest rates one or two times (25 bps each) throughout 2026. This tension is preventing the pound from being strong enough to push GBP/USD out of its range.
Technically, GBP/USD is still holding above its 200-day simple moving average (SMA) in the 1.3365–1.3360 area. This level is considered a "critical boundary": as long as the price holds above it, there is still potential for a rebound, but if it breaks, downward pressure could quickly intensify. (asd)
Source: Newsmaker.id
