GBP/USD: Pound back to 1.30 versus the dollar

The British pound is lower against the dollar on Wednesday after UK inflation data missed expectations by a wide margin while another central banker said UK rates should come down.

Sentiment was inhibited across global markets as details of the phase one trade deal between the US and China suggested tensions between the two nations look likely to persist.

GBP/USD was lower by 13 pips (-0.10%) to 1.3006 as of 1.30pm GMT, as it struggles for direction either side of the key 1.30 level. Sterling had made some early gains versus the dollar on Wednesday but stalled near 1.304 and slumped back below 1.30, only to recoup the level later.

The pound

UK inflation fell more than expected in December in data released Wednesday morning. The weaker UK inflation gives the Bank of England more scope to act on some the hints of a rate cut coming from its policymakers in recent days. Weak economic data, including today’s inflation reading is increasing expectations that the BoE will cut interest rates soon, maybe as early as its meeting at the end of this month.

Bank of England policymaker Michael Saunders added to the recent dovish rhetoric by saying it was probably appropriate to cut UK interest rates at a speech on Wednesday. Saunders was one of the first central bankers in the UK to switch from calling for tighter monetary policy to a looser stance.

Consumer prices, retail prices and producer prices all grew at a slower pace. The Consumer Price Index (CPI) for December rose just 1.3% year-over-year, much lower than consensus forecasts of a 1.5% y/y rise, which would have kept inflation steady from the 1.5% print in November.

The dollar

US Treasury Secretary Steve Mnuchin confirmed reports that tariffs against China will remain until at least November and won’t be rolled back until a phase two deal is agreed after the US election. US President Trump is scheduled to sign the agreement with Chinese vice premier Liu He at the White House later today. is a news site only and not a currency trading platform. is a site operated by TransferWise Inc. (“We”, “Us”), a Delaware Corporation. We do not guarantee that the website will operate in an uninterrupted or error-free manner or is free of viruses or other harmful components. The content on our site is provided for general information only and is not intended as an exhaustive treatment of its subject. We expressly disclaim any contractual or fiduciary relationship with you on the basis of the content of our site, any you may not rely thereon for any purpose. You should consult with qualified professionals or specialists before taking, or refraining from, any action on the basis of the content on our site. Although we make reasonable efforts to update the information on our site, we make no representations, warranties or guarantees, whether express or implied, that the content on our site is accurate, complete or up to date, and DISCLAIM ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. Some of the content posted on this site has been commissioned by Us, but is the work of independent contractors. These contractors are not employees, workers, agents or partners of TransferWise and they do not hold themselves out as one. The information and content posted by these independent contractors have not been verified or approved by Us. The views expressed by these independent contractors on do not represent our views.