Ella 
GBP/USD has gained momentum during the early Asian session on Friday, surging above the mid-1.2750 level. GBP/USD is currently trading around 1.2761, up 0.11% on the day. Inflation data and the prospect of further interest rate hikes from the Bank of England (BOE) provided support for the pound’s strength.
On Wednesday, the British Office for National Statistics announced that the monthly rate of the British Consumer Price Index (CPI) was -0.4%, which was higher than the market expectation of -0.5%, and the previous value was 0.1%. UK inflation came in at an annual rate of 6.8% in June, beating expectations for 6.8%. Core inflation, which strips out volatile oil and food prices, rose 6.9% in July, beating expectations for a 6.8% increase.
Core inflation raised concerns about persistent inflation in the UK economy, which could lead to further rate hikes by the Bank of England. This in turn supports the pound and acts as a tailwind for the GBP/USD pair.
The number of Americans filing new claims for jobless benefits fell last week in the week ended Aug. 12, suggesting the labor market remains tight. The data strengthened the case for the Fed to raise interest rates again. Wednesday’s Fed minutes emphasized that inflation remains unacceptably high and that further tightening of monetary policy may be needed to bring inflation to its longer-term target.
Still, U.S. jobless claims fell to 239,000 in the week ended Aug. 12. The U.S. Bureau of Labor Statistics (BLS) reported on Thursday that the figure was slightly lower than the market expectation of 240,000. Meanwhile, continuing jobless claims rose to 1.716 million. Finally, the August manufacturing survey report released by the Philadelphia Fed showed that the US August manufacturing survey report rose to 12, higher than the expected value of -10 and the previous value of -12.
UK retail sales data will be the key event on Friday. The monthly data for July is expected to have fallen by 0.5%. Next week, market participants will turn their focus to UK and US Purchasing Managers Index (PMI) data. Investors will look for GBP/USD trading opportunities from these data.
