Events to pay attention to today:
09:00 EET. GBP – Claimant Count Change
14:30 EET. USD – CPI m/m
GBPUSD:
In the early hours of Asian trading on Tuesday, the GBP/USD pair remains on the defensive above the 1.2800 support level. The Pound Sterling (GBP) is under pressure due to lower interest rates, as investors expect a rate cut by the Bank of England (BoE). Fresh impetus is expected from UK labour market data and US CPI inflation on Tuesday.
On Monday, Bank of England Governor Catherine Mann stated that the UK still has a long way to go before inflationary pressures meet the central bank’s 2% target. UBS Global Research data released on Monday predicts that the Bank of England will reduce interest rates by 25 basis points (bps) in August, which is a delay from the previous expectation of a cut in May.
However, cautious market sentiment ahead of key events in the UK and the US may support safe-haven assets such as the US Dollar (USD). The US Consumer Price Index (CPI) for February is forecast to remain unchanged at 3.1% y/y, while the core CPI for February is expected to decline from 3.9% to 3.7%. A stronger than expected CPI report will further dampen hopes of a near-term Fed rate cut. This, in turn, could boost the US Dollar and create a headwind for the GBP/USD pair.
Market participants will be monitoring UK labour market data, such as employment change, benefit claimants, ILO unemployment rate, and average earnings. Later on Tuesday, CPI inflation data for February will be released in the US. These events may cause market volatility and provide direction for the GBP/USD pair.
Trading recommendation: Trading predominantly Buy orders from the current price level
Origin: FreshForex
