Important events today:

13:30 UTC – MSC. USD – Consumer Price Index

The GBP/USD pair is gaining ground above the mid-1.2700s during the early Asian session on Thursday. US Dollar (USD) weakness and the risk-on environment are providing some support to the major pair ahead of the release of key US inflation data due later on Thursday. The GBP/USD pair is currently trading near 1.2760, up 0.21% on the day.

Late Wednesday, New York Federal Reserve (Fed) President Williams gave a speech on the economic outlook for 2024. Williams said U.S. interest rates will need to remain high “for some time” until central bank authorities are confident that inflation will return to the 2% target. According to WIRP, markets have priced in a 5% chance of a rate cut on Jan. 31 and a nearly 70% chance of a rate cut on March 20. This, in turn, could put pressure on the US Dollar and serve as a tailwind for the Pound-Dollar pair.

Bank of England (BoE) Governor Andrew Bailey said on Wednesday that he hopes the recent decline in mortgage costs will continue. However, the Bank of England Governor gave no hint as to what the path of interest rates would be as he reiterated the need to reduce inflation. Meanwhile, Jonathan Hall, an external member of the Bank of England’s Financial Policy Committee, said on Wednesday that the rush to cut interest rates and restore growth is one of the biggest risks to financial stability this year.

Recommendations: Trade predominantly on Buy from current values