GBP/USD came under renewed bearish pressure and declined below 1.2800 on Tuesday. The US Dollar benefits from the souring market mood and weighs on the pair.
The GBP/USD pair fluctuates in a narrow channel slightly below 1.2800 in the European morning on Tuesday as investors refrain from taking large positions ahead of the UK inflation data on Wednesday. The negative shift seen in risk mood could cause the pair to extend its downward correction in the second half of the day.
The People’s Bank of China (PBoC) announced early Tuesday that it lowered the benchmark Loan Prime Rates (LPRs) by 10 basis points (bps) as expected. This decision revived concerns over a slowdown in global economic activity, making it difficult for risk-sensitive Pound Sterling to find demand.
Meanwhile, market researcher Kantar said that grocery inflation in the UK continued to soften in June, falling from 17.2% to 16.5% in the four weeks to June 11. “This is the lowest rate of grocery price inflation we’ve seen in 2023, which will be a relief to shoppers and retailers,” said Fraser McKevitt, head of retail and consumer insight at Kantar.