Ella 
In early Asian trading on Tuesday, GBP/USD closed on a positive line for the fifth consecutive day. Positive market risk appetite and a slight decline in the US dollar supported the rise in GBP/USD. As of press time, GBP/USD was trading at 1.2759, up 0.05% on the day.
Last week’s U.S. labor force data weakened the Fed’s case for cutting interest rates. The CME FedWatch tool showed traders were pricing in a 62% chance of a rate cut at the March meeting. The New York Fed’s 1-year inflation forecast is 3.01%, compared with the previous reading of 3.36%.
On Monday, Atlanta Fed President Raphael Bostic said U.S. inflation fell more than expected. Additionally, Bostic confirmed that the rise in unemployment was “well below” typically expected given the decline in inflation, while noting that the Fed is currently in a “very strong position.”
In terms of sterling, DeAnne Julius, a former member of the Bank of England (BOE) Monetary Policy Committee, said that the Bank of England will not start cutting interest rates in 2024. Julius also said that escalating tensions in the Middle East could lead to a new round of energy price increases, triggering a new round of inflationary shocks.
Later on Tuesday, the U.S. merchandise trade balance for November will be released. However, this secondary data may not have an impact on the market. Focus will turn to Thursday’s U.S. Consumer Price Index (CPI). On Friday, the UK will publish gross domestic product (GDP), industrial production and manufacturing production for November. In addition, many Fed officials will speak this week, including Barr (Tuesday), Williams (Wednesday) and Kashkari (Friday).
