Pound Sterling remained under pressure due to the negative market Sentiment ahead of US core PCE price index data.

The Pound Sterling (GBP) falls as investors become more Cautious. Ahead of next week’s interest rate announcements by the Bank of England (BoE) and the Federal Reserve (Fed). Both central banks are widely expected to maintain monetary policy steady. For the fourth consecutive meeting, although interest rate guidance for the duration of 2024 will be closely observed.

High UK inflation would enable BoE officials to maintain a hawkish stance on interest rates.

BoE policymakers are anticipated to desist from rate-cutting discussions. The United Kingdom’s economy is still enduring much higher inflationary pressures. Than the United States. However, officials could provide some hints regarding future interest rate reduction. The Summary of Economic Projections (SEP) published. Following the most recent Fed meeting showed that members expected three rate decreases in 2024.

Before the Fed’s interest rate announcement. Market participants will look at the core Personal Consumption Expenditure (PCE) price index data for December, which will be released at 13:30 GMT. If underlying inflation continues stubbornly high, Fed policymakers may focus on rate decreases after the first half of 2024.

Daily Digest Market Movers: Pound Sterling falls amid gloomy market attitude.

Pound sterling is broadly flat around 1.2700 as investors transfer focus to the interest rate decision by the The Bank of England will make its announcement next week.

The BoE is widely expected to keep interest rates unchanged at 5.25% for the fourth time in a row.

Investors will be watching closely to see if BoE policymakers follow the Fed or the European Central Bank (ECB) in contemplating raising interest rates.

Unlike the ECB and the Fed, BoE officials have not provided a timetable or estimates for rate decreases despite rising inflationary pressures.

Core inflation in the UK economy is 5.1%, much more than the desired rate of 2% and higher than in the US and the Eurozone.

This could imply that the Bank of England will be the last of the Group of Seven central banks to launch a “rate-cut campaign”.

Meanwhile, rising business confidence in the economy and anticipation for rate reduction may exacerbate price pressures.

PMI data provided by S&P Global for January were much higher, indicating a healthy start for 2024. In addition, disruptions in oil supply in the Red Sea could increase inflationary pressures in the manufacturing sector.

This could allow BoE policymakers to relax their restrictive interest rate stance.

Meanwhile, the negative market attitude has increased the appeal of safe-haven investments.

The United States’ Q4 Gross Domestic Product (GDP) figures, issued on Thursday, showed that the economy is expanding at a rapid pace, allowing Federal Reserve (Fed) officials to delay interest rate decreases in the first half of 2024.

The US Dollar is expected to rise more as the US economy grows strongly.

The US Dollar Index (DXY) seeks to recover a nearly The stock reached a six-week high of 103.80 as investors became cautious ahead of the core PCE price index data for December.

Monthly core PCE is expected to have increased by 0.2% in December, compared to 0.1% in November. The annual underlying inflation rate increased at a slower pace of 3.0%, compared to the previous figure of 3.2%. If economic data proves to be more persistent than expected, Fed members will present a hawkish interest rate forecast.