GBPUSD has had a big week of economic data that continues over the next two days.
Tomorrow we have inflation data from the UK and the latest FOMC interest rate decision from the United States.
GBPUSD Daily Chart
The GBPUSD pair shows signs of resistance at the 1.1665 level, which could signal dollar-supportive data ahead.
Monday brought the latest release of the UK GDP, which saw a better-than-expected result for the quarterly GDP. However, that was driven by a bounce after previous data was suppressed by business closures for the Queen’s funeral, and a recession is still looming.
Tuesday was also a good day for the British economy, with the employment figures coming in ahead of expectations. Analysts expected a loss of 17k jobs but saw an additional 27k.
The Bank of England looks set to raise interest rates for the ninth consecutive meeting on Thursday. Still, they will note the record’s most substantial increase in basic pay.
“This adds to thoughts of a full employment recession and supports some of the more hawkish pricing of the Bank of England policy cycle,” ING strategist Chris Turner said. He added that more than this might be needed to prompt the central bank to raise rates by more than half a percentage point, but it could give the pound a lift.
“Today’s UK data could light the fuse of a Cable rally, were US CPI data to oblige.” “Our prior has been that this rally stalls around this $1.2300/2310 area, but a close above here warns of another three to four big figures higher during thin, year-end markets,” Turner said.
Dollar strength came from the latest inflation data for the United States, which saw another decrease in inflation to 7.1%, with analysts expecting a 7.3% figure. Core inflation was also lower, with a print of 6%. Traders will now add to dollar longs ahead of tomorrow’s FOMC rate decision, which may bring a more dovish Federal Reserve press conference.
The dollar looks poised to end the recent sterling rally, which could come from the inflation, FOMC, or Bank of England rate path on Thursday.
