GBP/USD remains steady near its highest level in 14 months, hovering around 1.2780-70 during early Friday morning trading in London. Traders of the Cable pair are eagerly awaiting additional indications to sustain yesterday’s substantial rally.
The Pound Sterling experienced its strongest weekly gain in a week and has risen for the third consecutive day, reaching a multi-month high. This surge can be attributed to the broad weakness of the US Dollar and concerns regarding the Bank of England’s (BoE) hawkish stance.
Despite a mixed set of UK data earlier in the week, the bullish momentum of GBP/USD was not dampened due to worries about the BoE’s hawkishness, primarily driven by previously positive inflation figures. The UK’s Gross Domestic Product (GDP) for April matched a growth of 0.2%, compared to a previous decline of -0.3%.
However, both Industrial Production and Manufacturing Production experienced declines during the same period. Moreover, the Index of Services for the three months leading up to April fell short of expectations.
The US Dollar Index (DXY) has rebounded from its largest daily loss in three months, hovering around 102.30. This resurgence has bolstered the demand for Pound Sterling.
Nevertheless, GBP/USD suffered a significant decline in the preceding day due to mixed US data and the market’s uncertainty regarding the possibility of a July rate hike by the Federal Reserve, despite hints from policymakers on Wednesday.
On Thursday, US Retail Sales for May showed a growth of 0.3%, surpassing expectations of -0.1% and the previous reading of 0.4%. Core Retail Sales, which exclude automobile sales, met market forecasts of 0.1% for the same month, compared to the previous figure of 0.4%.
Furthermore, the NY Fed Empire State Manufacturing Index exceeded expectations in June, reaching 6.6 instead of the anticipated -15.1, while the Philadelphia Fed Manufacturing Index dropped to -13.7 from the previous reading of -10.4, falling short of the -14 forecast.
Additionally, US Industrial Production for May contracted by -0.2% against the estimated growth of 0.1% and the previous figure of 0.5%. Initial Jobless Claims also exceeded expectations, with a revised figure of 262,000 for the week ending June 9, compared to the anticipated 249,000.
Given this landscape, market participants currently exhibit a greater inclination towards the BoE’s hawkishness compared to the Federal Reserve’s stance. As a result, the GBP/USD pair remains in focus for bullish traders, despite the recent price correction.
Looking ahead, the preliminary readings of the Michigan Consumer Sentiment Index (CSI) for June, along with five-year inflation expectations, will follow UK’s Consumer Inflation Expectations for the same month. These releases will dictate the intraday movements of GBP/USD.
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