19 April 2024, GBP/USD
Event to pay attention to today:
09:00 GMT+3. USD - Retail Sales m/m
GBPUSD:
The GBP/USD remains on the defensive near the 1.2430 level in Friday's early Asian session. The major pair's decline is being supported by a strengthening US Dollar (USD), as strong US economic data and hawkish comments from Federal Reserve (Fed) officials have fueled speculation that the US central bank will delay interest rate cuts until September.
On Thursday, Atlanta Fed President Raphael Bostic said that US inflation was too high and that the central bank still had room to move on inflation. Bostic also said he was comfortable with patience and that a rate cut was possible before the end of the year. New York Fed President John Williams stressed that the Fed is data dependent and said he does not feel any urgency to cut rates. According to the CME FedWatch Tool, investors are pricing in a near 66% chance of a Fed rate cut in September.
On the data front, US initial jobless claims for the week ending 13th April rose by 212,000 from the previous week, below market expectations. Meanwhile, the Philadelphia Fed's manufacturing activity index rose to 15.5 in April from 3.2 in March, beating estimates of 1.5. Finally, US existing home sales fell 4.3% in the month to 4.19 million from 4.38 million, worse than expectations of 4.2 million.
As for the British Pound, expectations that the Bank of England (BoE) may cut interest rates sooner than the US Federal Reserve have put pressure on the Pound Sterling (GBP) against the US Dollar. However, Bank of England policymaker Megan Green said on Wednesday that a rate cut was not imminent and that the combination of high inflation and weak growth meant there was still some way to go to bring inflation back to target. Green added that recent tensions in the Middle East could pose a risk to the inflation outlook, including by raising inflation expectations. The comments failed to lift Sterling from near six-month lows. On Friday, investors will focus on UK retail sales data for March.
Trading recommendation: Watch the level of 1.2450, trade from it on the rebound.
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