US Dollar Forecast: Weak GDP, Sticky Inflation Keep Fed Cautious – Bond Yield and GBP/USD Outlook

Market Overview

The US Dollar weakened as Q4 GDP growth slowed to 2.3%, falling short of the 2.7% forecast and down from 3.1% in Q3. The softer growth reflects cooling economic momentum, though Unemployment Claims dropped to 207K, signaling continued labor market strength.

Meanwhile, the Advance GDP Price Index rose to 2.2%, highlighting ongoing inflation pressures, which could keep the Federal Reserve cautious on rate cuts. Bond yields remained steady, reflecting investor uncertainty over economic direction. Pending Home Sales fell sharply by 5.5%, pointing to potential weakness in the housing market.