GBPUSD:
The GBP/USD pair continues to rise for the second consecutive day, trading around the 1.2400 mark during Asian hours on Friday. The pair’s rise can be attributed to US President Donald Trump’s remarks late Thursday.
President Trump said he wants the US Federal Reserve (Fed) to cut interest rates immediately. ‘As oil prices are falling, I will demand that interest rates be cut immediately, and in the same way they should be cut around the world,’ Trump said at the World Economic Forum in Davos, Switzerland.
Traders expect the Federal Reserve (Fed) to keep the benchmark overnight rate in the 4.25-4.50 per cent range at its January meeting. Moreover, Trump’s policies could increase inflationary pressures, potentially limiting the Fed to another rate cut.
However, GBP/USD gains may be limited as the Pound Sterling (GBP) may face headwinds following recent data including softer-than-expected UK inflation and retail sales data for December, weaker labour demand in the three months to November and weak GDP growth.
Traders are expected to keep a close eye on the release of preliminary UK and US purchasing managers’ index (PMI) data for January. In addition, the Michigan Consumer Sentiment Index in the US will be in focus. These indicators are likely to provide important insights into short-term economic trends.
Trading recommendation: Watch the level of 1.2400, if the level strengthens above, consider Buy positions, if the level rebounds, consider Sell positions.
Origin: FreshForex
