During early European trading hours on Friday, the GBP/USD pair hovers near 1.2530, staying on the defensive as market sentiment remains cautious. Despite stronger-than-expected UK monthly GDP figures and improved Industrial Production data, the major pair continues to exhibit vulnerability.
According to the latest data released from the Office for National Statistics, the UK monthly Gross Domestic Product (GDP) expanded by 0.1% MoM in February, down from the previous reading of 0.3% but in line with market expectations. Moreover, UK Industrial Production for February showed improvement, rising to 1.1% MoM from a 0.3% decline in January. Additionally, the UK Goods Trade Balance for February came in at GBP-14.212 billion MoM, surpassing the prior figure of GBP-14.097 billion and beating the expected GBP-14.5 billion. Despite these positive indicators, the Pound Sterling (GBP) failed to gain traction, as market participants anticipate the Bank of England (BoE) to implement interest rate cuts sooner than the US Federal Reserve (Fed).
Conversely, recent hotter-than-expected CPI inflation readings and stronger Nonfarm Payrolls (NFP) data have fueled speculation that the Fed may delay interest rate cuts this year. This scenario lends support to the US Dollar (USD) and poses challenges for the GBP/USD pair. Market participants are closely monitoring the preliminary US Michigan Consumer Sentiment Index for April, as well as speeches by Fed officials Bostic and Daly later in the day, for further insights into market direction.
