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Feb 29 - 11:55 AM

GBP/USD - COMMENT-Sterling At A Loss For Breakout Catalysts Following US PCE

By Paul Spirgel  —  Feb 29 - 10:25 AM

As-forecast U.S. core PCE data failed to move GBP/USD much, leaving the pound mired within recent ranges, which should keep cable's cap near 1.27 in place until a new catalyst for Fed and BoE policy expectations emerges.

The next significant data sets include UK retail sales on March 4 and a spate of employment-related U.S. data including JOLTS, initial jobless claims and U.S. non-farm payrolls on March 6 through March 8.

Recent U.S. and UK data have indicated that inflation reduction has been tempered considerably, bolstering Fed and BoE policymakers' warnings against premature easing.

This week's tight range and the slightly wider 2024 range, 1.2518-1.2788, is likely to remain intact as U.S. and UK economies work through the current inflation plateau.

However, should U.S. inflation resume its descent toward the Fed target and raise expectations of U.S. easing, sterling is likely to take out resistance by 1.27, putting the 2024 high in focus as the BoE's inflation fight has considerably more ground to make up.

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Source:
Refinitiv IFR Research/Market Commentary

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