- The Pound Sterling trades sideways near 1.2750 against the USD as investors await the US inflation data for November.
- The impact of US inflation should be limited on Fed interest rate prospects unless there is a dramatic deviation from expectations.
- Investors expect the BoE to leave interest rates steady at 4.75% on December 19.
The Pound Sterling (GBP) performs strongly against its major peers on Tuesday in a light United Kingdom (UK) economic calendar week, with investors becoming increasingly confident that the Bank of England (BoE) will leave interest rates unchanged at 4.75% in the monetary policy meeting on December 19.
The majority of BoE officials are expected to vote for an unchanged interest rate decision as the UK headline inflation has ticked up again after declining below the bank’s target of 2%. The BoE had already projected that inflation would pick up after coming within the bank’s desired range, suggesting that the central bank needs to do more to bring inflation down sustainably.
Later this week, investors will focus on the UK monthly Gross Domestic Product (GDP), and Industrial and Manufacturing Production data for October. The GDP and factory data will show the current status of economic health. Economists expect the factory and GDP data to have expanded after declining in September.
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