The GBP/USD currency pair went up again in the morning in Europe. The pair stays below 1.2400 because the market is still cautious, which helps the US dollar keep its place before the PCE inflation data.

Before the US Core PCE-Price Index for December, which is expected to stay the same at 0.2% MoM, the GBP/USD pair may continue to move sideways because the market isn’t sure what to do. But high inflation in the US will draw in the bears.

The GBP/USD buyers aren’t impressed by UK Finance Minister Jeremy Hunt’s willingness to support growth. This is because the Chancellor is still defending his tax hike, even though the Conservatives aren’t happy about it.

“Jeremy Hunt, the British finance minister, will say on Friday that he will fix the country’s low productivity with post-Brexit changes to the economy and finance, but he will also stick to the tax hikes that have angered some Conservative Party lawmakers,” said Reuters.

Irish officials’ calls for solutions to Brexit seem to help the GBP/USD fight off the bears. Before the Federal Reserve’s favourite measure of inflation, the Core Personal Consumption Expenditures (PCE) Price Index for December, the market was nervous because of mixed US data. As the chances of a policy change by the Bank of England (BoE) grew, the US dollar stayed weak, and the GBP/USD exchange rate went down.

But the US GDP grew by 2.9% in the fourth quarter, instead of the 2.6% expected and the 3.2% seen before. The Fed’s hawkishness was then hurt by weak US Personal Consumption Expenditures (PCE) data.

Even though Wall Street ended positively, US Treasury bond rates went up, but S&P 500 Futures went down.

Conclusion

Before essential meetings of central banks next week, traders look at the US PCE to see how things are going.