The GBPUSD Exchange Rate has UK consumer price data on Wednesday, with key U.S. data later in the week.
GBPUSD – Weekly Chart
The GBP/USD was holding the support just ahead of 1.3200, which held prices up in May and July. A third buyer boost could be an important low, but weakness could go to 1.2800.
UK consumer price data is released at 2 pm HKT with a quarterly dip expected to 3.6% from 3.85%. The latest update comes after a 0.1% quarterly growth print, so the odds of steeper inflation are not high.
The analyst consensus is that Britain has an inflation problem, but the worst may be over. But UK headline inflation was running at 3.8% over the 12 months through September, well above the Bank of England’s 2% target. One of the problems has been food prices, as well as the government’s influence on pricing.
With the government’s finances being tight, there is less opportunity to subsidize energy or travel costs, for example. Next Wednesday is the long-awaited UK government budget, and volatility could ensue in the run-up to those statements.
The U.S. is getting to see some data that was delayed with the government shutdown, but could move the USD sharply. The first data will be the FOMC minutes overnight, but they have been in a wait-and-see mode.
But data on Thursday will come with the important jobs data at 8:30 pm HKT. This release is important because it could set the tone for the GBP v USD all the way to next Wednesday’s UK budget.
Federal Reserve governor Christopher Waller repeated his belief that the central bank should lower interest rates in December, due to the weak labour market.
“With underlying inflation close to the FOMC’s target and evidence of a weak labour market, I support cutting the committee’s policy rate by another 25 basis points at our December meeting,” he said.
“My focus is on the labour market, and after months of weakening, it is unlikely that the September jobs report later this week or any other data in the next few weeks would change my view that another cut is in order”.
The expectation of a further cut has not helped stocks in the last week, as investors have been in correction mode.
