Ella 
In early Asian trading on Thursday, GBP/USD gained momentum above the mid-1.2700 level. GBP/USD was boosted by weakness in the U.S. dollar (USD) and maintaining risk appetite ahead of key U.S. inflation data later on Thursday. GBP/USD is currently trading around 1.2760, up 0.21% on the day.
Later on Wednesday, New York Federal Reserve (Fed) President Williams spoke on the economic outlook for 2024. Williams said U.S. interest rates will need to remain high “for some time” until central bankers are confident that inflation will return to their 2% target. Bloomberg’s World Interest Rate Implied Probability (WIRP) data shows that the market has The probability of a rate cut on March 31 is set at 5%, and the probability of a rate cut on March 20 is close to 70%. This may therefore cause some selling pressure on the US dollar and become a “tailwind” for the GBP/USD currency pair.
Bank of England (BOE) Governor Andrew Bailey expressed hope on Wednesday that the recent decline in mortgage costs will continue. However, the Bank of England governor did not give any hints on the path of interest rates as he reiterated the need to lower inflation. Meanwhile, Jonathan Hall, an external member of the Bank of England’s financial policy committee, said on Wednesday that the boom from falling interest rates and a recovery in economic growth was one of the biggest risks to financial stability this year.
Market participants will focus on U.S. December inflation data, as measured by the Consumer Price Index, due later on Thursday. On Friday, the UK will publish manufacturing production, industrial production and monthly gross domestic product for November. These data will provide direction for the GBP/USD pair.
