GBP/USD Attempts to Regain 1.2800

March 13, 2024 - Written by Frank Davies

STORY LINK GBP/USD Attempts to Regain 1.2800

The dollar spiked higher in immediate reaction to the stronger-than-expected consumer prices data, but it failed to hold the gains.

The Euro to Dollar (EUR/USD) exchange rate dipped to near 1.09 before a rebound to around 1.0940.

After losses following the UK wages data, the Pound to Dollar (GBP/USD) exchange rate also slumped to near 1.2750 before recovering to near 1.2800.

There will still be the risk of an adverse reaction and stronger dollar later in the session.

US consumer prices increased 0.4% for February, in line with consensus forecasts, although the year-on-year inflation rate edged higher to 3.2% from 3.1% and above expectations of 3.1%.

Core prices increased 0.4% on the month compared with forecasts of 0.3% with the year-on-year rate declining only slightly to 3.8% from 3.9% and compared with expectations of 3.7%.

After stronger than expected data last month, there were expectations that another elevated reading would undermine the chances of a Fed rate cut in the first half of 2024.

The shift in expectations was relatively limited with traders still pricing in over a 65% chance that the Federal Reserve would cut interest rates at the June policy meeting compared with just over 70% on Monday.

Treasuries also recovered initial losses with the 10-year yield just below 4.10%.

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TAGS: Pound Dollar Forecasts