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The British pound (GBP) held gains against the U.S. dollar (USD) during Wednesday’s European trading session near 1.2450. GBP/USD is strong ahead of the release of US Consumer Price Index (CPI) data for January, which will be released at 13:30 GMT.
Economists expect the core CPI, which excludes volatile food and energy prices, to increase at a slower annual rate of 3.1% compared with 3.2% in December. During the same period, the annual CPI inflation rate is expected to remain at 2.9%. The monthly rate of CPI and core CPI is expected to rise by 0.3%.
Market participants will be closely watching U.S. inflation data, which will influence speculation on how long the Federal Reserve will keep interest rates in a range of 4.25%-4.50%.
Federal Reserve Chairman Jerome Powell said on the first of two days of congressional testimony on Tuesday that the central bank is “in no rush to cut interest rates” given strong economic growth and persistent inflation pressures. Powell argued that reducing policy constraints “too quickly or too much” could “hinder progress toward inflation.”
The U.S. Dollar Index (DXY), which tracks the greenback’s value against six major currencies, was slightly higher near 108.00 ahead of the release of U.S. inflation data.
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