GBP/USD stays defensive near 1.2050 as risk aversion precedes US, UK inflation – by anilpanchal7 GBPUSD RiskAppetite Inflation Employment CentralBanks
ting downside pressure on the Cable pair is the risk-off mood and the firmer US Dollar. However, hopes of overcoming the British workers’ strikes and recently firmer data from the UK seem to put a floor under the prices.
During the weekend, Reuters rolled out the news suggesting that the British firms are ready to refill the staff gaps even at the cost of the biggest pay rises since 2012. Thecould help the UK policymakers overcome multi-week-old workers’ strikes and help the economy avoid recession, as well as propel the inflation and help the Bank of England to remain hawkish. However, this week’s UK jobs report will be important to watch for clear directions.
It should be noted that the last week’s UK growth numbers helped British Chancellor Jeremy Hunt to mention that “the fact the UK was the fastest growing economy in the G7 last year, as well as avoiding a recession, shows our economy is more resilient than many feared." On the other hand, the market’s risk-off mood underpinned the US Dollar’s run-up amid mildly positive Fedspeak, especially after Friday’s strong US Consumer Sentiment and inflation expectations. During the weekend, Philadelphia Federal Reserve President Patrick Harker pushed back the chatters of a Fed rate cut during 2023. However, the policymaker did mention, “Fed not likely to cut this year but may be able to in 2024 if inflation starts ebbing.
Looking forward, Tuesday’s UK employment numbers will precede US Consumer Price Index to direct short-term GBP/USD moves. Following that, Wednesday’s UK inflation numbers data will be important for clear directions. Given the comparatively more hawkish comments from the Bank of England officials, than the Fed policymakers, the GBP/USD price may witness recovery in case the US CPI disappoints.
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