- GBP/USD trades on a weaker note near 1.2719 on the stronger USD.
- The Fed is likely to keep its benchmark rate steady on Wednesday.
- UK CPI inflation report might offer some hints on whether the BoE will signal the timeline of its first interest rate cut.
- The UK February CPI inflation and Fed interest rate decisions will be the highlights on Wednesday.
The GBP/USD pair trades in negative territory for the fifth consecutive day during the early Asian session on Wednesday. Investors await the UK February Consumer Price Index (CPI) inflation data and the Federal Reserve (Fed) interest rate decision on Wednesday. The Fed is anticipated to hold rates steady for a fifth straight time at its March meeting. GBP/USD currently trades around 1.2719, down 0.01% on the day.
Markets expect the Fed will keep its benchmark rate steady in a range of 5.25% to 5.5% on Wednesday as inflation remains elevated. Fed Chairman Jerome Powell noted that cutting rates too early could spark a resurgence of inflation and cause more pain for consumers. The Fed is likely to maintain its forward guidance and stress that it needs more evidence that inflation is on a sustainable path toward its 2% target before lowering interest rates. The lower bets on the rate cut expectation might lift the US Dollar (USD) in the near term and cap the upside of the GBP/USD pair.
On the other hand, the UK CPI inflation report due later in the day might offer some hints on whether the Bank of England (BoE) will signal the timeline of its first interest rate cut or retain its higher rate for a longer stance. The headline UK CPI is expected to rise 3.6% MoM in February from a 4.0% rise in January, while the Core CPI figure is projected to fall to 4.6% YoY in February from a 5.1% rise in January. The stronger-than-expected data might convince the BoE to hold the higher rates for a longer rate narrative and boost the Pound Sterling (GBP) against the Greenback.
Traders will keep an eye on the UK CPI inflation for February on Wednesday ahead of the Fed interest rate decision. After the meeting, the focus will turn to Chairman Jerome Powell’s press conference and economic projections. On Thursday, the BoE interest rate decision will be a closely watched event. These events could give a clear direction to the GBP/USD pair.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD stays in positive territory above 1.0850 after US data
EUR/USD clings to modest daily gains above 1.0850 in the second half of the day on Friday. The improving risk mood makes it difficult for the US Dollar to hold its ground after PCE inflation data, helping the pair edge higher ahead of the weekend.
GBP/USD stabilizes above 1.2850 as risk mood improves
GBP/USD maintains recovery momentum and fluctuates above 1.2850 in the American session on Friday. The positive shift seen in risk mood doesn't allow the US Dollar to preserve its strength and supports the pair.
Gold rebounds above $2,380 as US yields stretch lower
Following a quiet European session, Gold gathers bullish momentum and trades decisively higher on the day above $2,380. The benchmark 10-year US Treasury bond yield loses more than 1% on the day after US PCE inflation data, fuelling XAU/USD's upside.
Avalanche price sets for a rally following retest of key support level
Avalanche (AVAX) price bounced off the $26.34 support level to trade at $27.95 as of Friday. Growing on-chain development activity indicates a potential bullish move in the coming days.
The election, Trump's Dollar policy, and the future of the Yen
After an assassination attempt on former President Donald Trump and drop out of President Biden, Kamala Harris has been endorsed as the Democratic candidate to compete against Trump in the upcoming November US presidential election.