The GBP/USD exchange rate broke its five-day losing streak, rebounding from a 15-month low of 1.2099. At the time of writing, the pair trades at 1.2166, marking a recovery, although still down by over 0.26%. The recent movements in the forex market highlight the volatile nature of currency trading amidst economic data releases and investor sentiment shifts.
The pair's decline to near 1.2160 came despite the release of slower-than-expected US producer price inflation data. The US Producer Price Index (PPI) report for December indicated that producer inflation rose at a slower pace than anticipated. This data hinted at prices dipping slightly but remaining close to Wall Street's estimates, influencing market dynamics significantly.
During the North American session, the GBP/USD had plunged below 1.2200. However, the slower-than-expected growth in producer inflation supported the view that the Federal Reserve might opt to keep interest rates on hold throughout the first half of the year. This possibility provides a backdrop for potential stability in the forex market.
The Pound Sterling gained ground amid improved investor confidence, with its performance during the Asian trading hours on Tuesday showing resilience as it remained above 1.2200. The recent downturn at the start of the week led to substantial liquidations, with over $734 million liquidated in total, including over $152 million in BTC.
Meanwhile, the US Dollar Index (DXY) surrendered its intraday gains and flattened near 109.50. This flattening reflects the broader market sentiment and underscores the impact of economic data releases on currency valuations.