- The Pound Sterling trades above the psychological support of 1.2500. The currency remains on the back foot against the US Dollar as market sentiment turns risk-off after investors push back Federal Reserve rate cut expectations. S&P 500 futures have extended their downside in the European session after plunging almost 1% on Wednesday.
- Hot United States inflation data for March, combined with robust labor demand, forced traders to pare big bets supporting Fed rate cuts. Meanwhile, investors’ confidence in three rate cuts by the year-end has also waned, and they are now anticipating only two.
- The US CPI has risen by more than expected for straight three months, suggesting that the Federal Reserve will opt to continue to hold interest rates steady in the range of 5.25%-5.50%. Price pressures remained stubbornly higher in March due to a significant rise in gasoline prices, rentals, and insurance costs.
- On the United Kingdom front, the monthly Gross Domestic Product (GDP) and factory data for February, which will be published on Friday, will guide the next move in the Pound Sterling. The monthly GDP data, which represents the state of the economy, are forecasted to have grown at a slower pace of 0.1% after expanding by 0.2% in January.
- Economists have forecasted that monthly Industrial Production data will remain stagnant after contracting by 0.2% in January. On year, Industrial Production is estimated to have increased 0.6% from the prior reading of 0.5%. Monthly Manufacturing Production is expected to have increased by a meagre 0.1% after remaining stagnant in January. On an annual basis, the economic data is anticipated to rise at a higher pace of 2.1% against the former reading of 2.0%.
- The UK factory data is a leading indicator of overall demand from domestic and overseas markets. Upbeat factory data would boost hopes of the UK economy coming out of the technical recession.
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