●GBP/USD shows bearish momentum ahead of crucial UK economic indicators
●Market consensus projects modest 0.01% monthly CPI increase with annual inflation potentially cooling to 4.4%
●DXY rebounds near 102.20 as Fed pivot expectations weigh on xrp newscurrency markets
The GBP/USD currency pair relinquishes its prior session gains, trading downward around the 1.2720 level during Wednesday's Asian trading hours. This retracement occurs as market participants position themselves ahead of significant economic releases from Britain later in the day.
Wednesday's economic calendar features the November releases of UK Consumer Price Index (CPI), Producer Price Index (PPI), and Retail Price Index data. Economists forecast the monthly CPI figure to show 0.01% growth following a stagnant 0.0% reading previously. Year-over-year inflation is projected to decelerate to 4.4% from October's 4.6% print.
Recent monetary policy decisions from the Bank of England (BoE) maintained the benchmark rate at 5.25%, marking a 15-year high. With economic indicators showing softening conditions and labor market slack emerging, futures markets currently price in approximately four 25-basis-point reductions beginning mid-2024. This projected easing cycle could potentially lower the policy rate to 4.25% by December 2024.
BoE Deputy Governor Sarah Breeden emphasized the necessity of maintaining restrictive monetary conditions during Tuesday's remarks. While avoiding specific forecasts, she highlighted the substantial economic costs associated with persistent inflationary pressures. These comments reinforce Governor Andrew Bailey's consistent messaging regarding the need for sustained policy tightness.
The US Dollar Index (DXY) demonstrates recovery momentum near 102.20 at time of writing, partially recouping Tuesday's declines. This USD strength emerges alongside growing market expectations for Federal Reserve policy easing in early 2024, with recent housing data showing mixed results.
Tuesday's US economic releases revealed Housing Starts surging to 1.56 million, significantly above the 1.36 million consensus. Conversely, Building Permits dipped slightly to 1.46 million versus expectations of 1.47 million. Market attention now turns to Wednesday's Existing Home Sales data and CB Consumer Confidence survey for further directional cues.
