This week will bring policy decisions from central banks on both sides of GBP/USD
Sterling was hit as were most currencies by a surprise increase in US producer prices and the inevitable knock-on re-think about whether it’s soon enough to declare inflation beaten and cut interest rates. The market has already seen expectations of when the Federal Reserve might start to trim borrowing costs pushed back this year. The current favored moment, June, is now under the spotlight.
Much may depend on official UK February inflation data, released this week a day before the MPC makes its call. Headline inflation is expected to have relaxed to 3.6% on the year, from 4% in January. This would mark another two-year low, cement a clear downtrend, and keep rate-cut hopes very much alive. Sterling markets will be very keen to see if last month’s three-way split on the nine-member panel is repeated.
GBP/USD currently struggles with selling pressure on any approach to the psychological 1.28 resistance area, even though they tend not to push it down too far. A durable break above that point would be a very bullish signal and put the significant peaks of last July back in focus.Leveraged trading in foreign currency or off-exchange products on margin carries significant risk and may not be suitable for all investors.
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