British Pound Sterling Slightly Declined
London: 12 December 2023 (TraderMade): The pound remained directionless on Tuesday following mixed economic data releases from the US and UK. While US inflation eased slightly in November, UK wage growth showed signs of cooling, leaving the Bank of England's next interest rate decision hanging in the balance.
The GBPUSD pair declined by 0.17% to 1.25342 (At about 03:04 PM GMT - Compared to its Monday Close).
US inflation
Consumer prices increased 3.1% annually in November, aligning with expectations and causing minimal market reaction.
UK wage growth
Average earnings excluding bonuses grew 7.3% year-on-year in the three months to October, falling from 7.8% and raising concerns about the Bank of England's hawkish stance.
The data fueled speculation that some members of the Bank's Monetary Policy Committee may switch their vote from a rate hike to a hold at the upcoming meeting on Thursday. While a rate increase is still considered likely, the focus will be on the central bank's forward guidance regarding future interest rate movements.
Meanwhile, the Federal Reserve and the European Central Bank are also expected to keep interest rates unchanged at their meetings. However, market expectations favor earlier rate cuts by both institutions compared to the Bank of England, potentially impacting currency valuations.
Despite earlier gains driven by falling US bond yields, the pound lost momentum following the release of the UK wage data.
