GBPUSD holds lower ground below 1.1400 amid market’s anxiety ahead of US inflation, UK GDP
|- GBPUSD stays defensive around 50-DMA support, inactive after falling the most in a week.
- Sour sentiment underpins firmer US dollar, light calendar in the UK keeps bears hopeful.
- US CPI for October precedes UK Q3 GDP to direct short-term market moves.
GBPUSD remains mildly bid around 1.1350, following a 1.6% daily fall, as traders seek clear directions during early Thursday.
The Cable pair portrayed broad US dollar strength amid a risk-off mood to recall the bears. However, the cautious sentiment ahead of today’s US Consumer Price Index (CPI) data for October and the British Gross Domestic Product (GDP) for the third quarter (Q3), up for publishing on Friday, restrict the Cable pair’s immediate moves.
Hopes of more positive measures from the UK, in its upcoming fiscal plan, join the hopes of political optimism to challenge the GBPUSD bears of late.
As per Bloomberg News, the UK is to cut the surcharge on bank profits to 3% to keep the industry competitive. Also positive for the Cable pair are the latest diplomatic moves by UK Prime Minister (PM) Rishi Sunak. “Rishi Sunak will become the first British prime minister in 15 years to attend the British-Irish Council summit on Thursday and meet with the leaders of the Scottish and Welsh devolved governments as he bids to rebuild relations,” said Reuters.
Fears emanating from China’s coronavirus conditions joined the hopes of the US government gridlock, due to the midterm elections, to weigh on the market sentiment the previous day. While portraying the mood, equities returned to the red after a three-day absence while the US Treasury yields also remained depressed. Even so, the US Dollar Index (DXY) bounced off a six-week low to print the first daily gain in three.
Alternatively, downbeat comments from the US Federal Reserve (Fed) policymakers and the mixed headlines from Russia tried to restrict the GBPUSD pair’s downside.
Moving on, the US CPI for October, expected to be 8.0% versus 8.2% prior, to direct immediate GBPUSD moves ahead of the first readings of the UK Q3 GDP. While a likely easing in the US CPI could weigh on the quote amid the latest downbeat Fedspeak, anticipated weakness in the British GDP data could keep the pair sellers on the table.
Technical analysis
Although the 50-DMA challenges GBPUSD bears around 1.1320, the pair’s retreat from the two-week-old resistance line, close to 1.1585 by the press time, keeps the bears hopeful of meeting the monthly support line near 1.1200.
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