- GBP/USD snaps a two-day winning streak ahead of UK data.
- BoE policymakers expressed fear over the deepening recession, endorsing rate cuts.
- US CPI is expected to rise but at a slower pace. with the core annual rate to remain stable.
GBP/USD trades lower around 1.2270 during the Asian session on Tuesday, snapping a two-day winning streak. The GBP/USD pair faces minor pressure ahead of the employment data from the United Kingdom (UK) due to be released later in the day.
Bank of England (BoE) policymakers Huw Pill and Katherine Mann expressed concerns about the potential cumulative effect of higher interest rates in the ongoing battle against persistent inflation. Fearing a deepening recession, they are expected to endorse earlier rate cuts.
The market sentiment for the Pound Sterling (GBP) received a boost as the UK preliminary Gross Domestic Product (GDP) data showed better-than-expected figures last Friday. This suggests that the UK may have avoided a recession in 2023. However, the growth outlook remains downbeat, with projections indicating a decline in fresh investments from firms for capacity expansion in the last quarter. This downturn is attributed to weak demand from both domestic and overseas markets.
The US Dollar Index (DXY) struggles to halt losses, bidding around 105.70 at the time of writing. However, the Greenback could cheer the recovery in US Treasury yields. The yield on a 10-year US bond yield improved to 4.65% by the press time.
The anticipation is high as market participants await the upcoming US inflation data set to be unveiled later in the North American session. Projections indicate a rise in the Consumer Price Index (CPI) for October, albeit at a slower pace. Meanwhile, the forecast for the core annual rate remains stable. If the actual data aligns with these expectations, it could reinforce the market’s belief that the Federal Reserve (Fed) has completed its interest rate hikes, which in turn, could strengthen the downward pressure on the US Dollar (USD).