- The cable has been underpinned against the greenback ahead of UK’s CPI print.
- Upbeat market mood has improved the demand for risk-sensitive assets.
- Investors will keep an eye on Fed Powell’s speech.
The GBP/USD pair has witnessed a strong upside move on Tuesday amid the improvement in demand for risk-sensitive assets after the DXY weakens as investors digested the announcement of seven interest rate hikes in 2022. The cable has gained almost 2% after printing a 52-week low near 1.3000 last week.
The major is performing stronger ahead of the disclosure of Consumer Price Index (CPI) numbers by UK Office for National Statistics on Wednesday. A preliminary estimate for the yearly UK’s CPI is 5.9% much higher than the previous print of 5.5%. The unfolding of the UK’s CPI above or near the preliminary estimate will trigger the odd of one more rate hike by the Bank of England (BOE).
It is worth noting that the BOE has increased its interest rates by 25 basis points (bps) three times in a row. Also, the BOE was the first central bank, which elevated its interest rates after the widespread of Covid-19.
Meanwhile, the US dollar index (DXY) is performing subdued near 98.50 ahead of the speech from the Federal Reserve (Fed) Chair Jerome Powell. The announcement of six more rate hikes by the end of 2022 has done the casualties however investors would look for the number of 50 bps interest rate hikes by the Fed in coming monetary policy announcements.
Although UK’s CPI print and Powell’s speech will remain the major drivers, investors will also focus on the NATO meeting on a diplomatic solution for the Russia-Ukraine war, which is due on Thursday.
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