The GBP/USD pair continues its downward trajectory for the second consecutive session, trading near 1.2940 during Friday’s Asian market hours. The British Pound (GBP) remains under pressure as risk sentiment weakens, exacerbated by global trade worries after U.S. President Donald Trump threatened a 200% tariff on European wines and champagne, unsettling financial markets.
Investors now turn their attention to the UK’s monthly Gross Domestic Product (GDP) and factory output data for January, set for release later in the day. Market participants will closely analyze the GDP figures, given the Bank of England’s (BoE) recent concerns over economic growth. In its February policy meeting, the BoE revised its GDP growth forecast downward to 0.75% for the year, a sharp decline from its earlier projection of 1.5% in November.
Meanwhile, the U.S. Dollar (USD) continues to strengthen amid concerns over a global economic slowdown, with traders anticipating the Michigan Consumer Sentiment Index data on Friday. The U.S. Dollar Index (DXY), which measures the greenback against a basket of six major currencies, gained traction following Thursday’s jobless claims data and softer-than-expected Producer Price Index (PPI) figures. At the time of writing, the DXY hovers around 104.00.
Labor market data further reinforced the USD’s momentum. U.S. Initial Jobless Claims for the week ending March 7 came in at 220,000, beating expectations of 225,000. Continuing claims also dropped to 1.87 million, below the forecasted 1.90 million, signaling resilience in the labor market.
Inflationary pressures in the U.S. appear to be moderating. The PPI rose 3.2% year-over-year in February, down from 3.7% in January and lower than the expected 3.3%. Core PPI, which strips out food and energy prices, increased by 3.4% annually, compared to 3.8% in the previous month. On a monthly basis, the headline PPI remained flat, while core PPI edged down by 0.1%.
With the GBP under strain and the USD finding support from economic data, the currency pair remains vulnerable to further downside movement. Traders will closely monitor upcoming economic releases for additional market cues.
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