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On February 8, the median U.S. 1-year inflation forecast rose to its highest level since November 2023. Capital Economics assistant economist Ruben Gargallo Abergus wrote: "This at least adds another reason for the Fed to remain cautious and suspend the easing cycle for a while." Higher inflation expectations are not the only inflation headwinds the Fed is currently facing. Wage growth continued to exceed expectations in January, which could push up inflation in the service sector. Economists expect Fed officials to keep interest rates unchanged at the March 18-19 policy meeting, and may even extend the suspension of rate cuts at the June meeting.The Israeli military says it has struck a Hamas weapons depot in Syria.According to Iranian state media reports, Irans Supreme Leader Khamenei met with visiting senior Hamas leaders in Tehran.On February 8, four large model application products under Baidu Smart Cloud, namely Keyue, Xiling, Yijian and Zhenzhi, were officially launched with access to the new version of the DeepSeek model.On February 8, according to Nikkei Chinese, Japans soaring food prices are dragging down personal consumption. The results of the household survey of the Ministry of Internal Affairs and Communications of Japan showed that consumer spending in 2024 actually decreased by 1.1% year-on-year. The "Engel coefficient", which indicates the proportion of food in consumer spending, is 28.3%, a 43-year high. Monthly spending in December 2024 actually increased by 2.7%, and consumption showed a recovery trend. From the perspective of the composition of consumer spending in 2024, the negative factors that actually contributed the most to consumer spending are transportation and communications, which actually decreased by 4.1% year-on-year. Due to the exposure of certification violations by some Japanese automakers, automobile production was suspended for a time, affecting consumption.

GBP/USD maintains a defensive posture above 1.2400, with focus on US inflation, BoE Governor Bailey, and Fed minutes

Alina Haynes

Apr 12, 2023 13:47

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GBP/USD fluctuates between 1.2415 and 1.2420 in the early hours of Wednesday's crucial session as bulls struggle to maintain control. This reflects a cautious outlook advance of the US Consumer Price Index (CPI) for March and the minutes from the most recent Federal Open Market Committee (FOMC) Monetary Policy Meeting. The speech of Bank of England (BoE) Governor Andrew Bailey is also crucial to monitor.

 

The most recent Bloomberg headlines indicate, however, that the British labor market is no longer constrained. "For the first time in two years, the number of people available for work in the United Kingdom increased, easing one of the tightest labor markets in more than a decade," reported the news.

 

In a similar vein, Reuters reported optimistic UK housing prices, allowing GBP/USD buyers to remain optimistic prior to high-profile data events. Reuters reported on Wednesday that British housing sales recovered to within a whisker of pre-crisis levels in March, signifying a rebound from September, when the failed economic plan of former prime minister Liz Truss caused market turmoil.

 

Recently, Neel Kashkari, president and CEO of the Federal Reserve Bank of Minneapolis, stated, "The inflation target of 2% should not be changed." However, other Fed policymakers have recently signaled divergent concerns, which has depressed the Cable investors. President of the Federal Reserve Bank of Philadelphia, Patrick Harker, stated that the Federal Reserve will continue to scrutinize available data to determine if additional action is required. John Williams, president of the New York Fed, had previously stated that interest rates will need to be lowered if inflation declines. In addition, the president of the Chicago Fed, Austan Goolsbee, stated on Tuesday that they should be cautious about increasing interest rates in light of recent developments in the banking sector.

 

In its January report, the IMF lowered its forecast for global real Gross Domestic Product (GDP) growth for 2023 from 2.9% to 2.8%. However, the international lender defends the efforts of the main central banks to combat inflation and gives GBP/USD pair traders no substantial indications.

 

After Wall Street's muddled close, S&P 500 Futures remain directionless in this environment, while US Treasury bond yields rise and encourage US Dollar sellers.

 

To thwart GBP/USD investors, the FOMC Minutes must defend the rate hike path. The meeting between US President Joe Biden and British Prime Minister Rishi Sunak in Northern Ireland is also notable. (NI).