GBP/USD's weakness isn't based on any particular catalysts from the Pound Sterling side, but solely on risk-off ahead of tomorrow's US economic data releases.

After a seven-day winning streak, the Pound Sterling exchange rate weakened against the US Dollar on Wednesday (28/February). GBP/USD even fell to 1.2620s. This weakness wasn't based on any particular catalyst from Sterling's side but was solely due to risk-off ahead of tomorrow's release of high-impact US economic data.

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There are no scheduled high-impact data releases from the UK this week. As a result, market participants are more concerned with US data as a potential market mover, particularly the Core PCE Price Index, which usually serves as the main inflation reference in the US Federal Reserve's monetary policymaking.

Consensus expects the PCE Price Index to slow to 2.4% annually, while the Core PCE Price Index only weakened to 2.8%. However, there is huge uncertainty in these forecasts.

"There is a cautious tone in the markets this morning ahead of the high-impact US data, which has caused sterling to weaken," said Kyle Chapman, FX market analyst at Ballinger & Co, as reported by Reuters.

"Looking from a broader perspective, the range is tight as the market awaits (US) inflation data," said Mohamad Al-Saraf, interest rate and FX strategist at Danske Bank.

Pound Sterling is classified as a risk-sensitive high-beta currency. In times of risk-off and increased market volatility, Sterling tends to weaken - in contrast to the safe haven status of the US Dollar.

As this week's UK data release schedule is quiet, traders are also starting to focus on next week's agenda. Specifically, the Spring Budget presentation by Finance Minister Jeremy Hunt will provide clues on the UK government's budget deficit and fiscal stimulus in the coming financial year.