The GBP/USD price rebounded after the relatively mixed US consumer inflation data (CPI). The pair declined to 1.3800, which was the lowest level since July 27.
US consumer inflation
Consumer prices continued rebounding in April as the economy rebounded. The headline CPI remained unchanged at 5.4% in July. This increase was better than the median estimate of 5.3%. On a month-on-month basis, the CPI declined from 0.9% to 0.5%.
Meanwhile, the core CPI, which tracks consumer prices but excludes volatile food and energy products, declined from 4.5% in June to 4.3% in July. On an MoM basis, the core CPI declined from 0.9% to 0.3%.
These numbers are still significantly higher than the Federal Reserve’s target of 2.0%. Still, in the past few FOMC decisions, the bank has maintained that the ongoing jump in consumer prices is temporary. It expects that the prices will retreat to its target of 2.0% in the next few months.
In general, inflation has been driven by the rising commodity prices and the ongoing labour and parts shortage in key sectors. For example, the automobile market is still suffering from lingering semiconductors. In the recent earnings results, some companies predicted that the shortage will remain until 2023. As a result, the prices of new and used cars has jumped.
Meanwhile, there are ongoing logistics issues at sea, where logistics firms have hiked their prices. Ports are also seeing challenges as more workers remain out of work because of the virus.
Looking ahead, the next key catalyst for the GBP/USD price will be the UK GDP numbers that will come out on Thursday. Analysts expect that the economy rebounded in the second quarter as the government
