Sterling will be closely watched in today’s London market against the backdrop of the preliminary UK GDP reading and US CPI trends, with the focus on whether the dollar-buying trend will continue.
Sterling will be influenced in today’s London FX market by the wait for UK economic data and US interest-rate trends. With the focus on whether the dollar-buying trend will continue, a similar performance is expected during European hours.
The preliminary UK GDP reading for July–September is expected to show 0.7% quarter-on-quarter growth, while monthly GDP for September is expected to be flat month on month. Industrial and manufacturing production are expected to decline month on month. Although accelerating growth has been priced in, the strength of the breakdown will be key.
Sterling-dollar could be capped near the lower bound of the cloud formation at around $1.3310, and a weak GDP result could limit any rebound. Even if the result exceeds expectations, whether the pair can return inside the cloud will indicate the strength of the rebound.
In the United States, dollar strength could intensify on an upside surprise in October CPI and expectations of a 0.50-point rate hike in December. The dollar index is approaching 103, and US interest-rate movements are expected to determine the market’s direction going forward.