Ella 
In early Asian trading on Thursday, GBP/USD was hovering near the 1.2800 mark. GBP/USD is slightly higher underpinned by dollar weakness. However, markets remaining in cautious mode ahead of key events in the US could boost the greenback and limit GBP/USD upside. GBP/USD is currently trading around 1.2604, up 0.05% on the day.
On Wednesday, data released by the Office for National Statistics (ONS) showed that the UK’s monthly gross domestic product increased by 0.2% in January, compared with -0.1% in the previous month. However, improving economic data failed to boost the pound as investors believe the UK economy is likely to end recession in the second half of 2023. Meanwhile, industrial production recorded a -0.2% monthly rate in January, compared with a 0.6% month-on-month increase in December.
In the United States, traders will be closely watching U.S. retail sales data for February, which may influence the Federal Reserve’s next move. Retail sales are estimated to rise 0.8% monthly from -0.8% in January. If the data is stronger than expected, it could persuade the Fed to shift to a less dovish setting. Fed fund futures now see a 71% chance of a rate cut this year, down from 95% at the start of the week, according to the CME FedWatch tool.
U.S. retail sales data for February will be the highlight on Thursday. The incident could trigger market volatility. On Friday, the UK will publish consumer inflation expectations. Next week, investors will turn their attention to the Federal Reserve’s interest rate decision.
