After the three-day surge, the GBPUSD conducted a technical correction and lost a modest amount of ground on Tuesday. While investors anticipate the UK budget developments. The GBPUSD has been trading in a rather tight range below 1.2200 since early Wednesday.
GBPUSD Investor waiting for UK Chancellor Hunt will present his budget to Parliament.
The US Dollar managed to maintain its footing as data indicated that the Core Consumer Price Index (CPI) climbed by 0.5% in February. Compared to the market estimate and January reading of 0.4%. Markets have begun to price in a 25 basis point Federal Reserve rate rise at next week’s meeting. While US Treasury bond rates have recovered from the severe drop caused by the failure of Silicon Valley Bank.
Meanwhile, Britain has extended its assistance for home energy costs for another three months. Through the end of the year. end of June, maintaining a price restriction that will keep typical yearly costs at £2,500. This outcome might imply that households would have greater discretionary income during that time period. which could lead to short-term inflation.
British Finance Minister (Chancellor) Jeremy Hunt is due to present the budget to Parliament on Wednesday at 1230 GMT. Hunt is said to be introducing new child-care help worth roughly £4 billion. As well as investment in skills training.
The influence of lackluster wage inflation statistics in the United Kingdom (UK) on the pricing of the Bank of England’s (BoE) upcoming rate decision appears to have dissipated. According to Reuters, the likelihood of a 25-basis point rate increase at the next Bank of England meeting has risen to 70% from roughly 40% on Tuesday. The US economic calendar will include February Retail Sales and Producer Price Index data in the second half of the day.
Although a stronger-than-expected monthly Core PPI of 0.5% or higher may help the US Dollar keep its position. The market reaction is likely to be fleeting. Market players will instead focus on US Treasury bond rates and the performance of Wall Street’s major indices. Another episode of risk rallying in the US session is likely to weaken the USD, and vice versa.
