In the Asian session, the GBP/USD pair is searching for temporary support at 1.2320. The US Dollar Index (DXY), which failed to take advantage of Wednesday’s V-shaped comeback, is exhibiting a muted performance as the cable looks to restart its upward movement.
According to the Consumer Price Index (CPI) data for December, which was issued on Wednesday, inflationary pressures have decreased in the United Kingdom.
On an annual basis, the headline inflation rate has been reduced to 10.5%, and the core CPI—which includes the cost of food and energy—has stayed stable at 6.3%.
The amount of the inflation rate reduction is insufficient to give market participants confidence that UK inflation is reducing on a positive note.
Solidifying signals of easing inflation dragged down the return produced by US Treasury bonds.
The US Treasury 10-year rates hit a new four-month low of 3.36%. A new three-month low in the vicinity of 4.07% was reached by the two-year US Treasury rates as well.
The likelihood of a slowdown in the pace of additional policy tightening by market participants has increased as a result of the lower-than-expected United States Producer Price Index (PPI) data and weaker retail demand.
Investors should prepare for the continuance of the extremely hawkish monetary policy.
|
Daily SMA20 |
1.2108 |
|
Daily SMA50 |
1.2086 |
|
Daily SMA100 |
1.1707 |
|
Daily SMA200 |
1.1985 |
