This Week: GBPUSD hit lows unseen since 2023

• GBPUSD dips to 2023 lows, below key 1.2200 level
   
• UK economic fears and strong USD pressure Sterling
   
• Wednesday inflation data could drive major volatility
   
• Bloomberg forecasts GBPUSD to trade between 1.200-1.251

Following last Friday’s closely watched US jobs report, GBPUSD sank to levels not seen since November 2023, even dipping below the psychologically-important 1.2200 level.

As the US dollar exerts its dominance across the FX complex, Sterling has also fallen afoul of markets of late.

Investors have grown increasingly fearful over the UK economic outlook, and the seemingly limited ability by policymakers to shore up economic growth; hence the recent selloff for the UK’s currency and bonds.

This one-week's volatility for GBPUSD is set to be at its highest since the US presidential elections last November.
 

With pivotal inflation data due on either side of the pond mid-week, Wednesday’s trading session could be particularly volatile for this FX pair nicknamed “cable”.

Bloomberg’s FX model forecasts a 72% chance that GBPUSD trades between 1.200 – 1.251 this week.

Events Watchlist:
 

• Wednesday, Jan 15th: UK December consumer price index (CPI)

Economists predict the UK’s headline CPI figures, which measure inflation, moved higher in December, although core and services CPIs inched lower. Higher-than-expected inflation could mean that the Bank of England (BOE) delays the rate cuts needed to shore up economic support, at a time when the government struggles with its debt burden. Such a mix may further sour the mood on Sterling and potentially drag GBPUSD towards 1.20.

• Wednesday, Jan 15th: US December CPI

With the Fed already guiding market’s attentions towards the inflation data, economists predict that December’s headline CPI would move higher to 2.9%, compared to November’s 2.7% year-on-year figure. Lower-than-expected CPI prints which help restore odds for Fed rate cuts in 2025 could prompt an easing of the US dollar, which alleviates the pressure on the Pound while helping GBPUSD rebound towards 1.251.

Here’s a comprehensive list of other key economic data and events due this week:
 

Monday, January 13

• CN50 index: China December external trade
   
• AUD: Australia December inflation
   

Tuesday, January 14

• AU200 index: Australia January consumer confidence
   
• JPY: Speech by Bank of Japan Deputy Governor Ryozo Himino
   
• XAUUSD: World Bank semiannual Global Economic Prospects report
   
• US30 index: US December PPI; speeches by New York Fed President John Williams, Kansas City Fed President
  Jeffrey Schmid
   

Wednesday, January 15

• GER40 index: Germany 2024 GDP; Eurozone November industrial production
   
• GBP: UK December CPI, RPI, PPI
   
• USDInd: US December CPI; speeches by New York Fed President John Williams, Richmond Fed President Tom Barkin, Chicago Fed President Austan Goolsbee
   
• US500 index: US earnings season kicks off (JPMorgan, Citigroup, Goldman Sachs, etc.)
   

Thursday, January 16

• JPY: Japan December PPI
   
• AUD: Australia December unemployment
   
• EU50 index: Eurozone November trade balance; Germany December CPI (final)
   
• UK100 index: UK November GDP, industrial production, trade balance
   
• USDInd: US initial weekly jobless claims; December retail sales
   
• US earnings: Bank of America, Morgan Stanley, TSMC
   

Friday, January 17

• NZD: New Zealand December manufacturing PMI
   
• SG20 index: Singapore December exports
   
• CHINAH index: China 4Q GDP; December industrial production, retail sales, jobless rate
   
• EUR: Eurozone December CPI (final)
   
• GBP: UK December retail sales
   
• US400 index: US December industrial production