Ella 
In early Asian trading on Friday, GBP/USD continued to fall to around 1.2700 points. GBP/USD fell to multi-day lows near 1.2740 as the greenback rebounded on strong US economic data. Later in the day, traders will focus on the preliminary reading of the U.S. Michigan Consumer Confidence Index for March, which is expected to remain at 76.9.
Data released by the U.S. Census Bureau on Thursday showed that U.S. retail sales rose 0.6% in February from a downwardly revised -1.1% in the previous month, which was 0.8% lower than expected. The retail sales control group’s monthly rate was flat at 0%, compared with the previous value of -0.3% monthly. In addition, the producer price index in February recorded a monthly rate of 0.6%, higher than the 0.3% in January; the core PPI increased by 0.3% month-on-month, higher than the 0.5% in January.
Stronger U.S. producer prices could convince the Federal Reserve to keep interest rates at 23-year highs longer than expected. Federal Reserve Chairman Jerome Powell said that a rate cut is indeed still on the table, but that Fed officials need to watch more inflation data before considering a rate cut. The suggestion that the Federal Reserve will keep interest rates high for an extended period of time boosts the US Dollar (USD) and is bearish for GBP/USD. Investors will be closely watching the Federal Reserve policy meeting, which is expected to keep interest rates steady for the fifth consecutive time.
In terms of sterling, the UK’s GDP rose at a monthly rate of 0.2% in January, indicating that the UK economy has emerged from recession. Markets have pushed back expectations for a rate cut by the Bank of England (BOE) from June to August. Bank of England Governor Andrew Bailey said that given some signs that restrictive policies are effectively reducing inflationary pressures, central bankers are turning to the question of how long they need to keep interest rates high.
