GBP/USD experienced a decline of 0.14% on Friday, stabilising above the key 1.2900 level as the UK economy contracted by 0.1% in January. This unexpected downturn heightened expectations for possible rate cuts by the Bank of England.
In the US, consumer inflation expectations increased, with a rise in the one-year outlook from 4.3% to 4.9%. The Federal Reserve’s upcoming monetary policy decisions are under consideration as tariffs are set to take effect on April 2.
Upcoming Economic Reports
Next week, the UK will release several significant economic reports, while the US will report on retail sales and housing data.
Friday saw the British pound lose a slight 0.14% against the US dollar, yet it managed to hold above the 1.2900 threshold. This came after January’s UK GDP figures revealed a 0.1% contraction, a surprise that has naturally fuelled conversations about potential shifts in monetary policy. With this dip in economic output, investors are re-evaluating their expectations for interest rates.
Across the Atlantic, consumer inflation expectations in the US edged higher. A leap from 4.3% to 4.9% in the one-year outlook suggests that households anticipate stronger price pressures ahead. Inflation readings like these are always worth monitoring, as they influence how the Federal Reserve approaches rate decisions. A central bank that sees persistent inflation risks may choose to keep policy tight for longer. With new tariffs scheduled to kick in on 2 April, trade policy will also be part of the mix as markets assess potential ripple effects.
Impact On Market Movements
Looking ahead, a set of UK economic reports will be making their way into the markets next week, helping investors gauge how the economy is holding up. Across the Atlantic, eyes will be on US retail sales figures and housing data—two sectors that offer useful insights into consumer strength and overall economic momentum.
For those trading derivatives, this upcoming data will carry weight. Movements in interest rate expectations can shift exchange rates rapidly, which means staying informed is not just helpful, but necessary. With both economies set to release key figures, any surprises may bring swift market reactions.
