Event to pay attention to today:
15:30 EET. USD – Retail Sales
GBPUSD:
On Thursday, the GBP/USD pair rose by more than nine-tenths of a per cent, reaching the 1.2560 area. This was driven by economic data from both the US and the UK that surpassed market expectations. UK gross domestic product (GDP) exceeded average market forecasts, while US producer price index (PPI) inflation data allayed investor fears after consumer inflation rose this week.
US President Donald Trump has unveiled his latest plan to boost tax revenues amid steep cuts in administrative taxes. ‘Reciprocal tariffs’, which are duties to be levied on countries that impose tariffs on US goods, are expected to be introduced in the coming months, with US Commerce Secretary, Howard Lutnick, overseeing the details.
The timing of further tariff threats remains uncertain, and investors are assessing new tariff threats as something that will not happen, similar to President Trump’s ‘Day One tariffs,’ tariffs on Canada and Mexico, and specific tariffs on automobiles, microchips and pharmaceuticals.Overall, there are many concepts of a plan to impose stiff import taxes on US consumers and businesses, but very little real progress, and investors are betting that the trend will continue.
UK Q4 GDP came in at 1.4% y/y, well above the 1.1% forecast and even higher than the revised 1.0% for the previous period. GDP for the quarter also beat expectations, rising to 0.1% vs. a forecast of a -0.1% decline.
In the US, the Producer Price Index (PPI) business activity inflation exceeded initial expectations, though the substantial downward revision to earlier data enabled investors to interpret the latest price data as indicative of a slowdown in inflation.PPI core inflation for the year ending January was recorded at 3.6% year-on-year (y/y), significantly above the predicted 3.3% but marginally below the revised 3.7% initially published at 3.5%.
In the final analysis of the week’s key data, US retail sales will be the only remaining item on the agenda. Market expectations are for another strong print. The monthly retail sales figure is forecast to fall slightly by -0.1%, from the previous reading of 0.4%.
Trading recommendation: GBPUSD: BUY 1.2560, SL 1.2500, TP 1.2620
Origin: FreshForex
