GBPUSD – Flat
An event to watch out for today:
09:00. GBP – Consumer Price Index
20:00. USD – FOMC decision on the key interest rate
GBPUSD:
The Pound-Dollar pair traded in negative territory for the fifth consecutive day during the early Asian session on Wednesday. Investors are awaiting UK inflation (consumer price index) data for February and the Federal Reserve’s (Fed) interest rate decision on Wednesday. The Fed is expected to leave rates unchanged for the fifth consecutive time at its March meeting. The GBP/USD pair is currently trading near 1.2719, down 0.01% for the day.
Markets expect the Fed to keep the benchmark rate in a range of 5.25% to 5.5% on Wednesday as inflation remains high. Fed Chairman Jerome Powell said cutting rates too early could trigger a resurgence in inflation and cause more pain for consumers. The Fed is likely to maintain its forward guidance and emphasize that it needs more evidence that inflation is on a steady path toward the 2% target before cutting interest rates. A rate cut on the expectation of a rate cut could boost the US Dollar in the near term and limit GBP/USD’s upside.
On the other hand, the UK CPI inflation report released later in the day may provide some clues as to whether the Bank of England (BoE) will announce the timing of the first interest rate cut or keep it in place for a longer period of time. The core UK CPI is expected to rise 3.6% m/m in February compared to a 4.0% rise in January, while the core CPI is expected to decline to 4.6% y/y in February compared to a 5.1% rise in January. Stronger than expected data could convince the Bank of England to keep rates higher for longer and boost the Pound Sterling (GBP) against the US Dollar.
Trading recommendation: Watch the level of 1.2700, if it is broken take Sell positions
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