
July 12, 2022 00:39 AM ET
By: AnalysisWatch
The GBP/USD pair is hovering around the new two-year low, reached at 1.1860 in the Asian session. A new round of selling seems imminent as investors support the greenback across the forex scale. Growing concerns over the release of the U.S. inflation report on Wednesday have put extreme selling pressure on risk-averse currencies.
In fact, investors expect the U.S. inflation rate of 8.8% to be significantly higher than the previous reading of 8.6%. However, the core Consumer Price Index (CPI), which excludes food and energy costs, is expected to fall by 5.7%, down from 6% previously. It is easy to calculate that the volatility of oil and food prices is such that, despite the lower consensus for the core CPI, the pure CPI is trending upward.
A higher pure CPI will significantly impact U.S. households' paychecks. Last week's average hourly wages were lower than previous figures. The scenario of lower earnings combined with a real income shock is a real nightmare for households.
In the United Kingdom, investors have turned their attention to economic data to be released on Wednesday. GDP (gross domestic product) is expected to be 0%, up from -0.3% previously reported.Annual manufacturing output could fall to 0.3% from the 0.5% previously reported. Apart from that, political nervousness is increasing as more and more civil servants submit their proposals for party leadership to the chairman of the Conservative Party.
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