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Sterling support ahead of jobless data

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GBPUSD is hovering around 1.2560 in Asian trading on Tuesday following the improved risk appetite.

The Pound Sterling received support from higher-than-anticipated UK Gross Domestic Product (GDP) figures released on Friday.

The UK economy expanded by 0.6% in Q1, surpassing expectations and signaling the end of the country’s brief recession. This robust economic rebound represents the strongest growth seen in over two years.

Market participants are now turning their attention to employment data expected later in the day.

There is anticipation of an increase in the number of individuals claiming jobless benefits in April, as indicated by the Claimant Count Change. Additionally, the ILO Unemployment Rate (3M) is expected to show a rise in the number of unemployed workers in the UK.

The US Dollar Index (DXY), which measures the US Dollar against six major currencies, is advancing due to cautious statements from Federal Reserve officials.

They emphasise the importance of maintaining higher rates for an extended period given the elevated inflation. Fed Vice Chair Philip Jefferson reiterated this stance on Monday, advocating for keeping current interest rates until signs of inflation easing emerge.

The New York Fed conducted a consumer sentiment survey, suggesting that US consumers foresee a widespread acceleration in inflation over the next year. Expectations have risen to 3.3%, up from the 3.0% figure reported in March for consumer one-year inflation expectations.

Investors are closely watching the Producer Price Index (PPI) on Tuesday, a pivotal economic indicator.

The PPI report could significantly impact the market, serving as a catalyst. Traders may use the PPI data to assess the potential outcome of the Consumer Price Index (CPI). If the PPI data exceeds expectations, it could further strengthen the US Dollar.

(Source: OANDA)