Forex Analysis & Reviews: 12.10.2023 - GBP/USD: Awaiting New Signs...

12.10.2023 02:55 PM

GBP/USD: Awaiting New Signs of Dollar Strength

The market has ignored the rise in U.S. producer inflation and the hawkish stance of the Fed officials regarding the prospects of monetary policy.

As indicated by the data published on Wednesday, the annual Producer Price Index (PPI) of American producers accelerated in September from 2.0% (revised from 1.6% in August) to 2.2% (against a forecast of 1.6%).

The annual core PPI (excluding food and energy) also increased in September to 2.7% (from 2.5% in August, with a forecast of 2.3%).

At the same time, most members of the Federal Open Market Committee (FOMC) consider another rate hike this year to be the most likely scenario, although much will depend on incoming data, particularly from the labor market, GDP dynamics, and inflation data. The minutes from the September Fed meeting, published on Wednesday, confirmed that monetary policy should remain "sufficiently restrictive" for some time to bring inflation back to the 2% level.

On Wednesday, the U.S. Dollar Index (DXY) remained at the previous day's closing level, near 105.56. As of writing, DXY was nine points below this level, while investors, for the most part, maintained a cautious trading position ahead of the release of the September statistics on U.S. consumer inflation (at 12:30 GMT). Here, a slowdown in the Consumer Price Index (CPI) to 0.3% (from 0.6% in August) and 3.6% in annual terms (compared to the previous 3.7%) is expected. The annual core CPI may also decrease in September to 4.1% from 4.3% the previous month.

These forecasts are holding back dollar buyers and the dollar itself from a more pronounced recovery after a recent correction. If these forecasts materialize, the likelihood of another interest rate hike in the U.S. will decrease.

Nonetheless, there is still a chance that inflation indicators will exceed expectations, considering the data on rising producer prices published Wednesday, which is also keeping the dollar from further weakening today.

The rise in inflation in the U.S. will compel Fed officials to adhere to their main scenario—keeping the interest rate at high levels for an extended period, at least until the middle of next year, as some economists believe, increasing the probability of another interest rate hike by the end of the year.

Meanwhile, market participants monitoring the dynamics of the British pound have paid attention to the publication of data on the UK GDP and industrial production (at 06:00 GMT). In August, the country's GDP increased by 0.2%, following a decline of 0.6% (revised from 0.5%) in July. However, industrial production volumes decreased by 0.7% in August, after a 1.1% decline (revised from 0.7%) in July. In annual terms, industrial production volumes increased in August, but fell short of the forecast (1.3% against a forecast of 1.7%, following a 1.0% increase in July).

In response to this publication, the pound weakened against the dollar and major cross pairs.

The GBP/USD pair, in particular, lost 28 pips immediately after the data was published, dropping below the 1.2300 level. If the decline accelerates today, likely after the release of U.S. CPI and in the case of higher figures, a break below the support levels at 1.2280 and 1.2269 would be the first signal for resuming short positions, with a break of the important short-term support level at 1.2232 confirming it.

The GBP/USD pair rose at the end of last week and the beginning of this week. However, this can largely be attributed to the weakening of the dollar rather than pound strength.

The pair remains in the zone of medium-term and long-term bearish trends, below the key levels of 1.2440 and 1.2770, respectively. Therefore, signs of dollar strength will trigger a resumption of the GBP/USD downward trend.

你今天已经点赞上这篇文章了

*这里的市场分析是为了增加您对市场的了解，而不是给出交易的指示。

If you have any content questions, please contact editorial-board@instaforex.com

Fundamental analysis

Jurij Tolin,
Analytical expert of InstaForex
© 2007-2025

该作者的更多文章

电子邮件订阅

EURUSD

Euro vs US Dollar

选择时间框架

分钟

小时

天

周

开始交易

通过InstaForex赚取加密货币汇率变动的收益。

下载MetaTrader 4并开启您的第一笔交易。

推荐文章

XAU/USD。分析與預測

WTI. 西德克薩斯中質原油。交易員等待非農就業數據

歐洲央行會議結果及克里斯蒂娜·拉加德記者會

6月6日需要注意什麼？新手的基本事件分析

2025年6月6日英鎊/美元匯率概況

2025年6月6日的 EUR/USD 概覽

拉加德：歐盟經濟不會受損

美元/日元。分析及預測

AUD/JPY。分析與預測

美元/加元。分析與預測

Top analytics