GBP/USD Bottoms Out
GBP/USD bottoms out in a short-term technical consolidation near the 1.2200 level as key inflation metrics from the US and UK growth figures are due for release during the mid-week session. US Consumer Price Index (CPI) inflation is expected to pick up, although a weaker US Producer Price Index (PPI) has fueled renewed investor hopes that inflation will not only ease, but will be enough to force the Federal Reserve (Fed) to renew its rate-cutting rhetoric.
Headline PPI inflation rose to 3.3% YoY from the previous reading of 3.0%, while core PPI increased to 3.5% YoY from the previous reading of 3.4%. While both figures came in below expectations, the results did not really boost investor sentiment as many had hoped as inflationary pressures continued to ease, albeit at a slightly lower boiling point than economists had expected. With inflation metrics still well above the Federal Reserve’s (Fed) annual target, a below-forecast PPI reading is not a big deal in terms of rate cut expectations.
UK CPI inflation metrics will kick off Wednesday’s market session, with market forecasts on average expecting a flat reading of 2.6% YoY in the non-preliminary reading. On the US side, CPI is expected to rise to 2.9% YoY from 2.7% previously, and still well above the Fed’s annual inflation target of 2.0%. (AL)
Source: Fxstreet
