The UK economy grew at a modest pace of 0.1% in November, falling short of the anticipated 0.2% growth. This underwhelming performance has placed pressure on the GBP/USD pair, which has been further weighed down by disappointing industrial figures. In the meantime, the US Dollar remains steady, limiting any potential upside for the pair. Market participants are now eagerly awaiting significant US economic data releases, including Retail Sales and Jobless Claims, which could influence market dynamics.
November saw the UK's Industrial and Manufacturing Production decrease by 0.4% and 0.3%, respectively, contributing to the subdued economic landscape. These figures have compounded the challenges facing the British Pound, which continues to struggle against the US Dollar. While the US Dollar holds its ground, attention is shifting towards upcoming key economic indicators from the United States.
The US Consumer Price Index (CPI) rose at an annual rate of 2.9% in December, aligning with market expectations and marking an increase from November's 2.7%. Meanwhile, the core CPI, which excludes volatile food and energy prices, rose by 3.2%, slightly underperforming forecasts of 3.3%. Additionally, the Producer Price Index (PPI) in the United States saw a 3.3% increase in December, falling short of the expected 3.4% growth.
While the UK grapples with economic challenges, the Algorand cryptocurrency has shown remarkable resilience. On Thursday, Algorand extended its gains, trading around $0.469 after an impressive rally of over 19% the previous day. This surge reflects positive sentiment in certain segments of the market, contrasting with broader economic uncertainties.
In Asia, speculation about potential monetary policy changes is rife. The Japanese central bank is expected to raise interest rates next week unless a significant market disruption occurs following US President-elect Donald Trump's inauguration. This expectation fueled volatility in the USD/JPY pair during a tumultuous Asian session on Thursday. The pair initially fell sharply from 156.00 to 155.20 amid growing anticipation of a rate hike by the Bank of Japan.
European markets also felt the impact of shifting sentiments. The EUR/USD managed to defend minor bids near 1.0300 but struggled to maintain positions above this level, buoyed by an improved market mood. Meanwhile, the Australian Dollar showed strength as the AUD/USD approached the 0.6200 level, having spiked to 0.6250 following robust Australian employment data. However, an uptick in Australia's unemployment rate has fueled speculation of early easing by the Reserve Bank of Australia.