Strong US data boosts dollar, caps sterling advance

The British Pound traded sideways against the US dollar on Friday, after reaching a daily high of 1.3413, but solid US data released this week capped sterling’s advance. GBPUSD trades at 1.3380 and continues to distance from the 200-day SMA key technical level at 1.3405.

US economic data revealed that inflation on the consumer side stabilised, but not so on the producer front. Annually, the Consumer Price Index (CPI) hit 2.7% in December, unchanged from November’s print, but the Producer Price Index (PPI) in November increased by 3%, up from 2.8% in the previous month.

In addition, the labour market had shown signs of strength following last Friday’s Nonfarm Payrolls report, which was solid despite missing forecasts, while the Unemployment Rate ticked below the Fed’s forecast of 4.5% to 4.4%. Initial Jobless Claims reported on Thursday dipped from 207,000 to 198,000, an indication that fewer Americans are applying for unemployment benefits.

Consequently, markets have trimmed their expectations for Fed rate cuts, hence propelling the US dollar higher.

The DXY Dollar Index, which tracks the greenback’s value versus its peers, is up 0.10% to 99.43, a headwind for the Pound.

On the other side, the British pound appreciated versus the Euro but not so against the US dollar, even though data showed that the UK economy grew above estimates in November 2025. Despite this, money markets continued to price at least two 25 basis points rate cuts by the Bank of England in 2026.

Next week, the UK docket will feature jobs, inflation and retail sales data.

Across the pond, the US schedule will feature housing data and the Fed’s preferred inflation gauge, the Core Personal Consumption Expenditures (PCE) Price Index for October and November.

GBPUSD chart by TradingView