Sterling fell in European trade on Thursday against a basket of major rivals, extending losses for the fourth straight session against the dollar following surprising UK growth data. 

The data showed the UK economy contracted more than expected in the fourth quarter of last year, likely pressuring Bank of England to ease policies sooner than planned. 

GBP/USD 

GBP/USD fell 0.2% to 1.2542, with a session-high at 1.2574, after closing down 0.2% on Wednesday, the third loss in a row, plumbing a one-week trough at 1.2525 following UK consumer prices data. 

Surprising Data

Earlier UK data showed the GDP contracted by 0.3% in the fourth quarter of 2023, while analysts expected a 0.1% contraction, and after a 0.1% contraction in the third quarter. 

Such data clearly puts pressure on BOE policymakers to start easing policies and cutting rates as soon as possible to prop up growth.

UK Rates

Markets now expect a 20%% chance of a BOE rate cut in March, and a 70% chance of such a cut in May. 

Traders overall expected an average of 78 basis points of UK interest rate cuts this year, up from 69 basis points before growth data. 

Gold prices fell on Wednesday as markets reassess likely monetary policy decisions by the Federal Reserve in upcoming months.

Such losses came after higher US treasury yields, as data showed US inflation rose more than expected in January, likely leading the Fed to delay the timeline of interest rate cuts. 

Later this week, important data on US producer prices and retail sales data will provide important clues on the path ahead for Fed policies.  

Otherwise, the dollar index fell 0.2% as of 19:16 GMT to 104.7, with a session-high at 104.9, and a low at 104.6. 

On trading, gold spot prices fell 0.2%, or $3.30 as of 19:17 GMT to $2003.9 an ounce, a mid-November low. 

Nickel prices fell on Wednesday amid growing pressures on most industrial metals as traders sell futures extensively following bullish US inflation data, which paved the way for an extended duration of high interest rates. 

Copper three-month futures at the London Metals Exchange fell 0.3% to $8233.50 a tonne. 

Earlier US data showed consumer prices rose past estimates in January, hurting the odds of early US rate cuts in the first half of the year. 

Markets now don’t expect a rate cut in March at all, with less than a 50% chance of a cut in May according to the LSEG interest rate probability app.

Such developments are impacting the total economy, including industrial metal prices as economic growth is projected to slow down, while the dollar is expected to rise further. 

Copper futures are down 5.5% at the London Metals Exchange since touching a month high at $8704.50 on January 31, under pressure from weaker Chinese demand and US interest rate prospects. 

Zinc fell 0.2% to $2310 a tonne as inventories increased at the London Metals Exchange to 254,825 tonnes, a 32-month high. 

As for other metals, aluminum fell 0.2% to $2222 a tonne, while tin shed 0.4% to $27450, as nickel added 0.6% to $16,350, while lead gained 0.6% to $2010. 

Otherwise, the dollar index fell 0.2% as of 16:35 GMT to 104.7, with a session-high at 104.9, and a low at 104.7. 

Nickel spot prices stabilized at $15.940 thousand a tonne in American trade as of 16:45 GMT. 

Global oil prices rose in European trade on Wednesday, maintaining gains for the eighth session in a row and approaching two-week highs, while still under pressure from higher US inventory buildup according to American Petroleum Institute data.

Now traders await official inventory data later today from the EIA, expected to show another buildup. 

Prices are also pressured by a dollar’s rally against major rivals, making dollar-denominated commodities costlier to holders of other currencies. 

Global Prices Today

US crude rose 0.6% to $78.13 a barrel, while Brent added 0.7% to $83.12 a barrel, with a session-low at $82.35. 

US crude rallied 1.15% on Tuesday, marking the seventh profit in a row, and scaling two-week highs at $78.44, as Brent rose 0.75% to $83.20, a January 29 high. 

Opec Forecasts 

OPEC released its monthly report today, maintaining its forecasts for global oil demand growth in 2024 at 2.25 million bpd, hitting a potential total of 104.40 million bpd. 

US Inventories 

Initial data from the American Petroleum Institute showed commercial crude stocks surged 8.5 million barrels in the week ending February 9, the second weekly increase in a row, passing estimates of 3.3 million barrels. 

Thus total stocks rose to 442.1 million barrels, the highest since the week ending January 12, a negative sign for demand in the US. 

Now investors await official data later today from the EIA, still expected to show a buildup of 3.3 million barrels.

The Dollar 

The dollar index rose 0.1% on Wednesday, extending gains for the third straight session and hitting three-month highs at 104.98 against a basket of major rivals.

The gains came after strong US consumer prices, which beat expectations for January and showed persistent inflationary pressures on Fed policymakers. 

Such data reduced the odds of a US interest rate cut in March to just 9%, while the odds of such a cut in May tumbled to just 37%.