: It was a quiet start to the day yesterday but as the day went on EUR/USD dropped, dragging GBP/USD lower with it. The pound fell from 1.5535 to a low of 1.5395 vs. the dollar, the move backed by a solid U.S. durable goods orders report. The data showed that orders rose a seasonally adjusted 2.8% in January vs. expectations for 1.7%, supported by a surge in demand for core capital goods. Other data, released at the same time, showed that the consumer price index fell 0.1% in January from a year earlier, this being the first year-over-year decrease since October 2009. Unsurprisingly, the fall in prices was in large part due to the fall in energy and gasoline prices and although the Fed saw this coming it will no doubt be an underlying concern for Janet Yellen. That said, the inflation data – as well as weaker unemployment claims data – was shrugged off and the dollar continued to strengthen across the board yesterday afternoon. Next up we have U.S. Prelim GDP, due at 1:30 this afternoon. The underlying fundamentals have been relatively strong recently, certainly when compared to other regions such as the Eurozone. If this is reflected in GDP this afternoon we could well see the dollar momentum continue as the week comes to a close.
We expect a range today in the GBP/USD rate of 1.5340 to 1.5520 ⇒ view full report