• The Pound Sterling rises against its peers as UK inflation rises faster than projected in December.
• Trump drops plans for US military action on Greenland and tariff threats against EU nations.
• Investors await US PCE inflation, flash US-UK S&P Global PMIs, and the UK Retail Sales data.

The Pound Sterling (GBP) trades higher against its major currency peers, except antipodeans, during the European trading session on Thursday. The British currency gains as the United Kingdom (UK) Consumer Price Index (CPI) rose more than expected in December.

The data released on Wednesday showed that the headline inflation accelerated to 3.4% year-on-year (YoY) compared to estimates of 3.3% and the November reading of 3.2%.

However, the impact of higher UK inflation seems to be limited on Bank of England (BoE) dovish expectations as the pace of price increases is expected to slow sharply in the coming months, with last year’s rises in utility costs and other government-controlled tariffs falling out of the annual comparison, Reuters reported.

Economists at the National Institute of Economic and Social Research (NIESR) think tank have stated that the Bank of England (BoE) “will not be worried by these numbers”, and they predict “one interest rate cut in the first half of this year”.Going forward, investors will focus on the UK Retail Sales data for December and the preliminary S&P Global Purchasing Managers’ Index (PMI) for January, which will be released on Friday.

The data is expected to show that Retail Sales, a key measure of consumer spending, contracted steadily by 0.1% month-on-month (MoM). This would be the third straight decline in the consumer spending measure.
 

Pound Sterling Price Today

The table below shows the percentage change of British Pound (GBP) against listed major currencies today. British Pound was the strongest against the Japanese Yen.

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).
 

Daily Digest Market Movers: Investors await US PCE Inflation data

• The Pound Sterling rises slightly to near 1.3450 against the US Dollar (USD) during European trading hours. The GBP/USD pair gains as the US Dollar ticks lower, but still holds Wednesday's gains driven by receding geopolitical and trade tensions between the United States (US) and the European Union (EU).
• As of writing, the US Dollar Index (DXY), which tracks the Greenback's value against six major currencies, edges down to near 98.75.
• Tensions between two of the world’s largest economies eased after US President Donald Trump took back his decision of imposing 10% tariffs on several EU members and the United Kingdom (UK), and dropped his plans of US military action on Greenland after a meeting with the Secretary General of the North Atlantic Treaty Organization (NATO), Mark Rutte.
• US President Trump also announced that both Washington and NATO have reached a framework of a “future deal with respect to Greenland, and in fact, the entire Arctic Region”.
• Disputes between the US and the EU over Greenland’s entitlement had propelled risk-off market sentiment, weighed on the US Dollar and US assets, as investors became worried about long-term relations between two of the world’s largest economies. The event also led to an improvement in the appeal of European assets.
• In the US, investors will focus on the US Personal Consumption Expenditure Price Index (PCE) data for October and November, which will be published at 15:00 GMT. The data will slightly influence market expectations for the Federal Reserve’s (Fed) monetary policy outlook. Currently, traders are confident that the Fed will keep interest rates steady in the range of 3.50%-3.75% in the policy meeting later this month, according to the CME FedWatch tool.
   

Technical Analysis: GBP/USD holds 50% Fibonacci retracement at 1.3404
 

(Click on image to enlarge)

GBP/USD trades flat near 1.3430 at the time of writing. The 20-day Exponential Moving Average (EMA) has flattened after a steady climb, signaling consolidation around the short-term mean.

The 14-day Relative Strength Index (RSI) at 51 (neutral) hints at indecision among traders, with no clear direction in the price action as the pair consolidates.

Measured from the 1.3795 high to the 1.3012 low, the 50% Fibonacci retracement at 1.3404 acts as immediate support, while the 61.8% Fibonacci retracement at 1.3496 caps rebounds. A break above 1.3496 would indicate that the pair is regaining strength.

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