The GBP/USD pair dipped below the 1.3000 mark on Tuesday as traders turned cautious ahead of the release of the US Personal Consumption Expenditures (PCE) data. This dip highlights renewed strength in the US dollar as market participants anticipate signals about the Federal Reserve’s future interest rate path from the PCE figures, a favored inflation measure for the Fed.
The British pound, which had shown relative stability in recent sessions, faced headwinds as sentiment shifted toward the greenback amid higher yield expectations. Should the PCE data indicate persistent inflation pressures, it could reinforce expectations of a prolonged period of higher interest rates in the US, adding downside pressure on the GBP/USD pair.
Analysts suggest that if the data points toward elevated inflation, the Fed may adopt a more hawkish stance, potentially extending the dollar’s strength against the pound. Conversely, weaker-than-expected inflation data could provide some relief for GBP/USD, allowing it to test back above the 1.3000 level. For now, traders remain on edge, awaiting further direction from the imminent inflation report.
