British Pound Trades Calm at $1.3520 Ahead UK GDP Data
The British pound sits calmly at $1.3520 on Thursday morning ahead of U.S. gross domestic product (GDP) data on Friday. The updated FX market across trading platforms showed that the GBPUSD pair is steady as the forex market anticipates FX volatility to persist amidst economic uncertainties.
The pound remains calm versus key trading partners during early European hours on Thursday, as investors exercised caution ahead of the release of UK GDP data on Friday.
Sterling slipped by 0.1% to $1.3508 against the greenback as markets reacted to the U.S. producer price index report while also climbing by the same margin to €1.1552 against the euro.
Still, the pound-dollar has been doing pretty well this year, up 8% from the first trades in January. The exchange rate is also sitting comfortably above all three major averages – the 50-day, the 100-day, and the 200-day moving averages.
The market anticipates release of U.S consumer price index and policy action of the European Central Bank (ECB) on Thursday to influence FX direction.
With the US Consumer Price Index (CPI) set for release, analysts are forecasting a further uptick in headline inflation, expected to rise to 2.9% year-on-year for August. According to the CME’s FedWatch Tool, markets are pricing in over 90% odds that the Fed will deliver a 25 basis-point rate cut.
FX volatility has picked up modestly since the start of the month but remains well below spring and even early August levels.
The rise in geopolitical risk in the Middle East (Israel’s strike in Qatar) and Europe (Russian drones downed in Poland) has failed to drive any sizeable FX reaction, according to ING analyst Francesco Pesole.
“US data remain the most likely driver of any larger FX volatility shake-up at this stage. August CPI data is released today, and we are aligned with the consensus in expecting a 0.3% month on month (MoM) core print.”
Yesterday, US producer price index (PPI) came in notably subdued, falling -0.1% MoM for both headline and core measures. July’s figures were also revised down by 0.2 percentage point, now showing a 0.7% MoM increase versus the initially reported 0.9%.
The key driver was a sharp -1.7% MoM drop in “trade services” – a proxy for corporate profit margins. This suggests that, for now, firms are absorbing higher input costs linked to tariffs rather than passing them on to consumers.
“We believe the risks are skewed to the downside for the dollar today, as relatively benign CPI data could give the go-ahead to re-enter USD shorts that might have been partly held back ahead of the release”, Pesole said. #British Pound Trades Calm at $1.3520 Ahead UK GDP Data Benchmark Yield on Nigerian Bonds Falls to 16.68%
