GBP/USD moved swiftly on Wednesday, moving closer to 1.2750 after the US Consumer Price Index (CPI) figures for November broadly met market expectations. The rest of the week remains on the UK side of the economic calendar, with Cable traders facing the US Producer Price Index (PPI) figures on Thursday.
US CPI inflation rose slightly for the year ended in November with headline CPI inflation rising to 2.7% YoY from 2.6%, while core CPI inflation held steady at 3.3% YoY. Monthly headline CPI inflation also rose in November, rising to 0.3% MoM from 0.2% in October. Despite the overall rise in headline inflation, Wednesday's CPI figures were broadly in line with estimates, keeping investor sentiment marginal.
According to the CME's FedWatch Tool, interest rate traders are now pricing in a 95% chance of a 25 bps rate cut when the Fed meets for its final meeting on December 18. Although CPI inflation has picked up in the short term, investors have decided that the change in the reported numbers is not enough to push the Fed away from cutting the last quarter point to end 2024.
US PPI inflation fell on Thursday, and markets are expecting a similar outcome to this week's CPI data: producer-level inflation is expected to rise at the front of the curve, but is expected to remain near recent levels overall. Core PPI is expected to rise to 3.2% YoY, up slightly from 3.1% in the previous period.
Source: FXStreet
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