The U.S. Federal Reserve is determined not to reduce interest rates too soon — and some economists say recent data has pushed a summer cut completely off the table.
Friday’s jobs report reiterated the seemingly unwavering strength of the U.S. labor market and suggested further need for Fed caution. All eyes will now be on Wednesday’s consumer price index. As a reminder, February’s annual inflation rate of 3.2% came in slightly higher than expected.
Employment data, price growth and the strength of the U.S. economy are causing market watchers to question the U.S. Federal Reserve's signals of three quarter-percentage point cuts this year.
A growing number of market participants have raised the possibility of no rate cuts at all this year. Minneapolis Fed President Neel Kashkari said last week that no reductions were a possible scenario if inflation continued to move sideways.
Market pricing reflects the ongoing uncertainty, with the probability of a rate cut now under 50% for both June and July, according to the CME’s FedWatch tool — significantly lower than at the start of the month.
Tomorrow's U.S. inflation report will play a determining role in the future direction of the dollar, including in the GBPUSD pair. If the CPI values turn out to be higher than forecast estimates, the GBPUSD pair will go down.
From a technical point of view, GBPUSD is in a wide upward range on the daily timeframe. If the inflation rate in the U.S. is high, the pair will move to the lower boundary of this range, tentatively to the level of 1.2260.
The final recommendation is to sell GBPUSD if the CPI in the U.S. (YoY) is higher than 3.5%.
The profit could be fixed at the level of 1.2260.
The Stop-loss could be placed at the level of 1.2820.
It’s suggested to limit the trading volume to no more than 2% of your deposit funds.
This content is for informational purposes only and is not intended to be investing advice.
