The GBP/USD pair is struggling to break above the 1.2800 barrier due to the recent stronger US Dollar driven by the February CPI inflation data. The US CPI rose 0.4% MoM and 3.2% YoY, exceeding market expectations. This stronger-than-expected inflation data may delay Federal Reserve rate cuts, causing the USD to gain strength against the GBP.
On the other hand, the annual rate of wage growth in the United Kingdom has been declining, with the Average Earnings Including Bonuses dropping from 5.8% to 5.6% and the annual wage growth excluding bonuses falling from 6.2% to 6.1%. This decrease in wage growth has led to an increase in expectations for Bank of England rate cuts, further impacting the GBP/USD pair.
Investors are eagerly awaiting the UK GDP growth number for January, which is predicted to increase by 0.2% MoM. Additionally, the upcoming Retail Sales data in February is expected to rise by 0.8% MoM. Strong Retail Sales figures could prompt a reassessment of market expectations following the CPI inflation report.
Bank of England and Federal Reserve Policies
The recent economic data releases have highlighted the divergence in monetary policy between the Bank of England and the Federal Reserve. While the Fed is hesitant to lower interest rates too soon due to high inflation, the BoE is facing pressure to cut rates in response to weakening wage growth. These conflicting policies are likely to keep the GBP/USD pair volatile in the near future.
The GBP/USD pair is facing pressure from both sides – a strengthening USD backed by robust inflation data and a weakening GBP due to declining wage growth. The upcoming economic releases will provide further insights into the direction of the currency pair, with investors closely monitoring the GDP growth, Retail Sales, and other key indicators. DEALINGSIFESTYLEKNEWSLIFESTYLEBLOGGINGMARKETINGMOVIESEntertainmentDIYSCIENCEINVESTINGSPORTSINTERVIEWSHOMEOWNERFINANCEHOMEOWNERSINSURANCEPRODUCTIVITYBUSINESSAPEXcontent-apexSOCIAL_MACHINEAUTOMATIONBLOCKCHAINLISTICTechnologyWILD_ChangeSTARTUPS_WeedRISING_TRADINGSEO_RANKINGContent_PlatformSTRATEGIC-ACQUISITIONSRECORDINGARTISTSFood_TechAd_TrackingHR_POSITIONSBRAND_AMBASSADORRetargeting_SoftwareSelling_AudiobooksPress_Release_SERVICEManufacturer_DealsPublishing_BloggerYouTube_TrendsSEO_ExtensionsGreen_EnergyAutism_StudyMo…
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