GBP/USD jumps to six-week tops, beyond 1.3900 amid post-US CPI USD weakness
|- GBP/USD gained strong positive traction on Tuesday amid renewed USD selling bias.
- The USD weakened further following the release of softer-than-expected US CPI print.
- The headline CPI decelerated to 0.1% in August; core CPI also fell short of expectations.
The USD weakened across the board in reaction to the softer US CPI report and pushed the GBP/USD pair back above the 1.3900 mark for the first time since August 6.
As investors looked past Tuesday's rather unimpressive UK jobs report, the GBP/USD pair attracted some buying near the 1.3830-25 region and built on the overnight bounce from sub-1.3800 levels. The uptick was exclusively sponsored by the emergence of some fresh selling around the US dollar, which lost some additional ground following the release of US consumer inflation figures.
According to the data published by the US Bureau of Labor Statistics, the headline US CPI decelerated to 0.3% in August as against expectations for a downtick to 0.4% from 0.5% in the previous month. Adding to this, core inflation, which excludes food and energy prices, also fell short of consensus estimates and recorded a modest 0.1% rise during the reported month.
On yearly basis, the headline CPI edged lower to 5.3%, as anticipated, while core CPI fell to 4% from 4.3%, missing expectations. The data dashed hopes for an imminent Fed taper announcement at the upcoming policy meeting on September 20-21. This was evident from a sharp intraday pullback in the US Treasury bond yields and weighed heavily on the greenback.
Apart from this, the prevalent risk-on mood – as depicted by a generally positive tone around the equity markets – further undermined the safe-haven USD. This, in turn, provided a goodish lift to the GBP/USD pair, taking along some short-term trading stops place near the 1.3890 region and setting the stage for a further near-term appreciating move.
Technical levels to watch
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