The Pound to US Dollar (GBP/USD) exchange rate traded without a clear direction on Tuesday as markets absorbed the latest US inflation figures without conviction.
Pound to Dollar (GBP/USD): 1.34321 (-0.25%)
Euro to Dollar (EUR/USD): 1.16464 (-0.18%)
Dollar to Japanese Yen (USD/JPY): 159.1175 (+0.72%)
DAILY RECAP:
The Pound (GBP) was subdued on Tuesday as a lack of UK economic data left Sterling trading largely sideways.
With no domestic releases to guide direction, the increasingly risk-sensitive Pound struggled to gain traction against either safer or higher-yielding peers. A mixed and cautious market mood also discouraged traders from placing more decisive bets.
Meanwhile, the US Dollar (USD) was similarly rangebound as investors digested the latest US consumer price index.
December’s CPI figures showed headline inflation holding steady at 2.7%, in line with expectations, while core inflation remained unchanged at 2.6%, defying forecasts for a modest uptick. The broadly in-line results failed to shift expectations for Federal Reserve policy, leaving the ‘Greenback’ without a clear catalyst.
With inflation data offering no surprises, USD movement remained muted, further constrained by an indecisive market mood that blunted demand for traditional safe-haven currencies.
Near-Term GBP/USD Forecast: Central Bank Rhetoric in the Spotlight
Looking ahead, attention turns to Wednesday’s US retail sales figures. A forecast rebound in November spending could lend the US Dollar some support if it points to resilient consumer demand.
However, USD direction may ultimately hinge on a series of speeches from Federal Reserve policymakers. Any broadly dovish messaging could revive rate cut expectations and weigh on the Dollar.
For the Pound, investors will be listening closely to comments from Bank of England Deputy Governor Dave Ramsden. As one of the policymakers who voted to cut interest rates in December, any indication that Ramsden favours further easing could undermine Sterling sentiment.
In the absence of major UK data, GBP/USD is likely to remain sensitive to central bank rhetoric and shifts in broader market risk appetite.
