GBP/USD extends its winning streak for the third consecutive day, trading around 1.2460 during Thursday's Asian session. Traders await the UK's preliminary Gross Domestic Product (GDP) data due later in the day. Economists expect a contraction in Q4 GDP, though the economy is projected to expand on an annual basis.

The outlook for the British economy remains uncertain, with Bank of England (BoE) Monetary Policy Committee (MPC) member Catherine Mann expressing concerns over weakening demand in the United Kingdom (UK) and the need for accommodative financial conditions.

Earlier this week, Mann told the Financial Times (FT) that demand conditions are significantly weaker than before. She had also advocated for a larger interest rate cut in last week's policy meeting, where the BoE unanimously agreed to lower rates by 25 basis points (bps)
However, GBP/USD's upside may be limited as persistent US inflation could strengthen expectations that the Federal Reserve (Fed) will maintain interest rates at 4.25%-4.50% for an extended period. According to the CME FedWatch Tool, the probability of a Fed rate cut in June has dropped to nearly 30% following the latest inflation data.

The US Bureau of Labor Statistics reported on Wednesday that the Consumer Price Index (CPI) rose 3.0% year-over-year in January, exceeding expectations of 2.9%. The core CPI, which excludes food and energy, increased to 3.3% from 3.2%, surpassing the forecast of 3.1%. On a monthly basis, headline inflation jumped to 0.5% in January from 0.4% in December, while core CPI rose to 0.4% from 0.2% over the same period.
Gross Domestic Product (YoY)
The Gross Domestic Product (GDP), released by the Office for National Statistics on a monthly and quarterly basis, is a measure of the total value of all goods and services produced in the UK during a given period. The GDP is considered as the main measure of UK economic activity. The YoY reading compares economic activity in the reference quarter compared with the same quarter a year earlier. Generally speaking, a rise in this indicator is bullish for the Pound Sterling (GBP), while a low reading is seen as bearish
GBP/USD gains ground possibly as traders project annual UK GDP to expand in Q4 2024.
BoE's Catherine Mann expressed concerns over weakening demand in the United Kingdom.
January's inflation in January has reduced the likelihood of a dovish Fed stance for the June policy meeting..

Source: Fxstreet