GBP/USD hovers around 1.2950, four-month highs ahead of UK GDP, factory data

• GBP/USD maintains its position near the four-month high of 1.2989 reached on March 13.
• Risk sentiment weakened after President Trump threatened a 200% tariff on European wines and champagne.
• Traders will closely watch the UK GDP figures as the BoE has expressed concerns over the economic outlook.

GBP/USD continues its decline for the second straight session, trading near 1.2940 during Friday’s Asian session. The pair faces challenges as the Pound Sterling (GBP) struggles amid weakened risk sentiment, exacerbated by concerns over global trade after US President Donald Trump threatened a 200% tariff on European wines and champagne, unsettling markets.

Traders now await the UK’s monthly Gross Domestic Product (GDP) and factory data for January, set for release on Friday. Investors will closely watch the UK GDP figures as the Bank of England (BoE) has expressed concerns over the economic outlook. In its February policy meeting, the BoE revised its GDP growth forecast for the year to 0.75%, down from the 1.5% projected in November.

The US Dollar (USD) appreciates due to mounting concerns over a global economic slowdown, with traders focusing on Friday’s Michigan Consumer Sentiment Index data. The US Dollar Index (DXY), which tracks the USD against six major currencies, gained strength after Thursday’s positive jobless claims report and weaker-than-expected Producer Price Index (PPI) data. The DXY is trading around 104.00 at the time of writing.

US Initial Jobless Claims for the week ending March 7 came in at 220,000, lower than the expected 225,000. Continuing claims dropped to 1.87 million, below the forecast of 1.90 million, indicating resilience in the US labor market.

Inflationary pressures in the US showed signs of easing. The PPI rose 3.2% year-over-year in February, down from 3.7% in January and below the 3.3% market forecast. Core PPI, which excludes food and energy, increased 3.4% annually, compared to 3.8% in January. On a monthly basis, the headline PPI remained unchanged, while core PPI dipped by 0.1%.