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In early Asian trading on Wednesday, GBP/USD fluctuated within a narrow range below the psychological mark of 1.2700. Later in the day, Bank of England official Catherine Mann will speak before the release of U.S. fourth-quarter gross domestic product. GBP/USD is currently trading around 1.2685, up 0.03% on the day.
On Tuesday, U.S. durable goods orders came in at -6.1% m/m in January, compared with -0.3% in December, below expectations of -4.5%. New orders for non-defense goods, which represent capital spending, rose 0.1% on the month, in line with expectations. Finally, the U.S. consumer confidence index released by the Conference Board was 106.7, lower than the market consensus of 115.0.
Investors are betting the first rate cut will come at the June meeting, the CME FedWatch tool showed, down from expectations for a rate cut as early as March. The U.S. personal consumption expenditures (PCE) index for January is due out on Thursday and could provide some hints about the long-term trend in inflation. The U.S. PCE price index is expected to rise 0.3% monthly from 0.2% in December.
On the other hand, Dave Ramsden, deputy governor of the Bank of England (BOE), said on Tuesday that inflationary pressures still exist and that he needs to watch more data to judge how long inflationary pressures are expected to last before he can change the UK The central bank’s policy stance. The Bank of England forecasts that inflation will return to its 2% target in the second quarter of 2024, but will then rise to around 2.75% later in the year. Financial markets expect the Bank of England to start cutting interest rates in August.
