GBP/USD advanced as US Dollar weakened amid lower US yields.
US Core PPI inflation rose to 3.6% YoY in January, exceeding the expected 3.3% but slightly below the revised 3.7%.
The UK GDP expanded by 1.4% year-on-year in Q4 2024, surpassing market expectations of 1.1%.
GBP/USD remains steady around 1.2560 during the Asian hours on Friday following gains in the previous session. The pair appreciated as US President Donald Trump delayed the implementation of reciprocal tariffs. Additionally, the US Dollar (USD) weakens amid falling US yields across the curve, despite ongoing concerns about a global trade war.
The US Dollar Index (DXY), which measures the US Dollar’s value against six major currencies, extends its losses for the fourth successive session. The DXY trades around 107.00 with 2-year and 10-year yields on US Treasury bonds standing at 4.31% and 4.53%, respectively, at the time of writing.
Core PPI inflation in the United States (US) rose to 3.6% YoY in January, exceeding the expected 3.3% but slightly below the revised 3.7% (previously reported as 3.5%). This has reinforced expectations that the Federal Reserve (Fed) will delay rate cuts until the second half of the year. Additionally, persistently strong inflation could further support the outlook for the Fed to keep interest rates at 4.25%-4.50% for an extended period.
Investors now turn their attention to the upcoming US Retail Sales data, the final major economic release of the week. Markets anticipate a slight contraction of -0.1% in monthly Retail Sales, following the previous 0.4% increase.
In the United Kingdom (UK), the data showed on Thursday that the economy grew by 1.4% year-on-year in Q4 2024, accelerating from an upwardly revised 1.0% in the previous quarter and exceeding market expectations of 1.1%, according to preliminary estimates. This marks the fastest GDP growth since Q4 2022. For the full year 2024, the British economy expanded by 0.9%, up from 0.4% in 2023, driven by a 1.3% increase in the services sector, compared to 0.4% growth the previous year.
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