- GBP/USD consolidates in the early European session.
- A slight pullback in US Treasury yields undermines the US dollar.
- US Retail Sales and Industrial Production data eyed.
The GBP/USD pair seems to be in a corrective pullback on Friday, having tested multi-month highs at 1.4166 on March 11. The pair follows the previous day's trading trend and confides in a 20-pip movement for the time being.
At the time of writing, the GBP/USD pair is trading at 1.4049, down 0.01% on the day.
The muted tone surrounding the US dollar index (DXY), which tracks the greenback performance against its six major counterparts, keeps the gains limited for the pair as of now.
The US Producer Price Index (PPI) readings came in at 0.6% in April, much higher than the market consensus at 0.3%. US Initial jobless claims edged lower to 473k in the previous week, better than the market forecast of 490k and signaling improved labor market conditions.
The reading came a day after stronger US inflation data fueled expectations of ending the era of easy monetary policy sooner than expected. However, Fed officials continuously downplayed the inflationary pressure, calling it transitory and would not impact the current Fed measures.
This, in turn, keeps investors cautious on any aggressive US dollar buying spree post US inflation data.
On the other hand, the UK economy shrank by 1.5% in Q1, the data was well received by the market, as it digested the economic pace despite a coronavirus lockdown. Additionally, the economy even managed to grow by 2.1% in March, the Office of National Statistics revealed on Wednesday.
Lately, Brexit remains a pain area for the cable, UK condemns EU over Brexit finance ‘threats’ and asks for its resolution in the latest developments.
As for now, investors turn their attention to US Retail Sales and Industrial Production data to gain fresh trading impetus.