The GBP/USD pair hovers around the 1.2800 mark during the early Asian trading hours on Thursday. The modest uptick of the major pair is supported by the weaker US Dollar (USD). Nonetheless, a cautious mode in the market ahead of the key US event might boost the Greenback and cap the upside of the pair. GBP/USD currently trades near 1.2604, adding 0.05% on the day.
On Wednesday, the UK monthly GDP estimate rose 0.2% MoM in January from a 0.1% contraction in the previous reading, according to the Office for National Statistics (ONS). However, the improved data failed to lift the Pound Sterling as investors believe the UK economy is likely to end the 2023 H2 recession. Meanwhile, Industrial Production dropped 0.2% in January from December’s reading of 0.6% MoM gain.
Across the pond, traders, we will closely monitor the US Retail Sales data for February, which might influence the Fed’s next move. The figure is estimated to show a rise of 0.8% MoM from a 0.8% fall in January. The stronger-than-expected report might convince the Fed to shift to a less-dovish setting. According to the CME FedWatch Tools, Fed funds futures now see 71 basis points (bps) in rate cuts this year from 95% at the beginning of the week.
Looking ahead, the US February Retail Sales data will be the highlight on Thursday. This event might trigger volatility in the market. On Friday, the UK Consumer Inflation Expectations will be released. Next week, investors will shift their attention to the FOMC interest rate decision.
GBP/USD
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