- GBP/USD bulls stay the course and aim for a higher high on Wednesday.
- US Retail Sales are the next big news on the calendar.
GBP/USD rallied early on Tuesday after data showed British wages rose faster than expected in the last three months of 2022. The data raised prospects for a more hawkish Bank of England, as the inflation battle consumes sentiment in the markets. In that sense, the US Consumer Price Index was the next key event for the pair, with the data underpinning the prospects for further rate hikes from the Federal Reserve.
As of this writing, GBP/USD is trading near 1.2170 and between the day’s range of 1.2116 and 1.2269, a high reached as investors read that there are signs that price and wage rises are taking hold, something that would normally lift the pound.
Wage growth in recent months has been strong enough, in our view, to justify another 25 basis point hike by the Bank of England at its March meeting, although of course we will have had another report on the labor market by then (and two CPI prints,” Nomura analysts explained. Meanwhile, a Reuters poll of analysts that the Bank of England will raise another 25 basis points on March 23, taking the main rate to 4.25 %, and then it will pause.
Turning to the New York session, US inflation data hit the screens and caused a two-way price action, with the US dollar whipping around the numbers as markets Investors tried to digest and draw conclusions from a mixed report. the data will ultimately help the Federal Reserve decide on its interest rate plans for the coming months, and is subsequently expected to drive markets globally for the next few days.
The US annual inflation rate, as measured by the Consumer Price Index, slowed only slightly to 6.4% in January from 6.5% in December, below market forecasts of 6.2%, which suggests that controlling inflation will take longer than expected. Consequently, the Dollar Index traded volatilely around 103.00 but rose on more bullish than expected data, which was seen as a damper on hopes that the Federal Reserve would end its tightening campaign soon.
For Wednesday’s key US data, analysts expect a strong rebound in retail sales after December’s sharp contraction, with a rebound in auto sales playing a role after back-to-back declines in November and December. . “Importantly, control group sales were also likely up due to a strong increase in online spending. We also expect bar/restaurant sales to have advanced (firmly) for the first time in three months.”
GBP/USD Technical Analysis
The pair has picked up two day longs in the market and could be attracting more bullish bets tomorrow as the bulls hunt the 1.22 area. This could offer a chance for the bears on Wednesday:
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
