Pound Lower Despite Upbeat GDP

Barbara Zigah

GBPDespite a slight pause, the pound has managed to hold on to its momentum against the US dollar after UK GDP data showed an unexpected rise for March, which beat analysts' expectations. That news helped to shore up optimism for the economic recovery in the UK, which is still leading its neighbors in terms of an aggressive strategy to combat the COVID-19 virus. The prime minister's easing of lockdown measures and the revised economic growth forecast from the Bank of England are also putting a positive spin on the currency.

In London trading as of 11:13 am, the GBP/USD was trading at $1.4132, a loss of 0.0453%, with the pair ranging from a low of $1.41068 to a high of $1.41541 in today's session. The EUR/GBP pair was lower at 0.8583 pence, down 0.0559%, off the session trough of 0.85744 pence while the peak was recorded at 0.86016 pence. The GBP/JPY was higher at 153.709 yen, a gain of 0.0827%.

Markets Focus on US Inflation Data

Market focus is riveted on today's release of US inflation data. The latest poll of economists and analysts suggests that the CPI for April will show a rise to 3.6% on an annualized basis, up from 2.6% in the previous reading, while on a month-on-month basis, the data is likely to show a drop to 0.2%. The core CPI, which strips out food- and energy-related components, is predicted to show a rise to 2.3% for March, well above the 1.6% in the last reading. The month-on-month reading of the core CPI is expected to be flat at 0.3%. The markets' concern is that, in the Biden administration's attempt to shore up an economy hard-hit by the pandemic, those efforts will have a detrimental impact on inflation. How the Federal Reserve reacts to the reading is paramount, though key players, including Fed Chairman Jerome Powell, have assured markets that they remain steadfast in their conviction that a loose monetary policy is still necessary.

Barbara Zigah

After working on Wall Street, Barb began her second career as a freelance writer at Daily Forex, where the CEO recognized fresh, untapped potential and was willing to give her a try. She’s never looked back. Since then, she’s worked steadily as a freelance writer and editor in the financial services and Forex-related industry.

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