In a few hours, UK inflation data will be released for February. Expected CPI is -0.4% MoM vs +0.5% in January. The core inflation rate is expected to be -0.7% MoM vs +0.3% last.
GBP/USD has been on a tear since late September 2020. However, at the BOE meeting February 4th, BOE Governor Baily said that although banks should get ready for negative interest rates, he never meant to imply they were going to move to negative territory. And with that, the Pound vs the US Dollar moved from 1.3566 to Tuesday’s highs of 1.3951.
Watch for profit taking ahead of the inflation data print. If the data is weaker than expected, the Pound may move lower as Baily may be forced into a more dovish position.
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