The British Pound to US Dollar (GBP/USD) exchange rate is trading in a subdued manner in the mid-North American session, with the pair falling below its opening price. This is due to a jump in producer inflation in the US and weakening of the Pound Sterling (GBP) following Wednesday’s UK inflation data.
The GBP/USD pair has seen a fresh selling wave, with the pair slipping back below the 1.2000 psychological mark in the last hour. This is lower than the intraday move up to the 1.2075 area and is now seen flirting with the weekly low touched on Wednesday. A chart of the pair shows that it has dropped to a fresh daily low during the early North American session.
The pair has gained some traction on Thursday, reversing a part of the previous day’s slide. This has taken it just below the 1.2000 psychological mark, or over a one-week low. The pair has stuck to its modest intraday gains through the first half of the European session and is currently placed just above mid-1.2000s, albeit lacks follow-through.
Investors are keeping an eye on the US producer price index (PPI), which rose by 0.4% in January, which is higher than the 0.1% consensus forecast. This is the highest jump since August 2020, and it has been attributed to a rise in energy prices. The data has provided a boost to the US Dollar (USD), as investors anticipate that inflationary pressures will increase in the US.
Meanwhile, the Pound Sterling (GBP) has weakened following Wednesday’s UK inflation data, which showed that inflation slowed to 0.7% in January, down from 1.3% in December. This is the lowest level since June 2020 and is well below the Bank of England’s (BoE) target of 2%. The data has weighed on the GBP, as it suggests that the BoE is unlikely to raise interest rates anytime soon.
The GBP/USD pair is likely to remain subdued in the near-term, as investors await further clues regarding the economic outlook of both the US and the UK. On the US side, investors will be keeping an eye on the US consumer price index (CPI) data, which is due to be released later today. On the UK side, investors will be focusing on the upcoming UK retail sales data, which is due to be released on Friday.
Overall, the GBP/USD is currently trading in a subdued manner, with the pair falling below its opening price. This is due to a jump in producer inflation in the US and weakening of the Pound Sterling (GBP) following Wednesday’s UK inflation data. The pair has seen a fresh selling wave, with the pair slipping back below the 1.2000 psychological mark in the last hour. However, the pair has gained some traction on Thursday, reversing a part of the previous day’s slide. Investors are keeping an eye on the US producer price index (PPI) and the UK inflation data, which will provide further clues regarding the economic outlook of both countries.
