GBP/USD Analysis: ignores Powell, holds on to gains

Valeria Bednarik FXStreet

GBP/USD Current Price: 1.2482

BOE meeting this Thursday, rates and APP seen unchanged.
UK August inflation surprised to the downside, core CPI at 1.5% YoY.
GBP/USD ends the day little changed near 1.2500, Pound underpinned by Brexit hopes.

The GBP/USD pair started the day losing ground, bottoming at 1.2438, as the greenback found some demand amid positive news coming from the Middle East late Tuesday, while UK data missed the market’s forecast. According to the official release, the kingdom’s inflation was softer-than-anticipated in August, up by 0.4% monthly basis and by 1.7% when compared to a year earlier. The core CPI came in at 1.5% YoY, below the 1.8% expected and the previous 1.9%. On the Brexit front, the lack of progress seems to be a discouraging sign for bulls. Meanwhile, the European Parliament voted in favour of granting the UK an extension to Article 50 if the UK were to request for one, although PM Johnson has already said he won’t do so. The pair recovered after the Fed’s decision but was unable to extend its gains beyond 1.2500.

Attention shifts to BOE

This Thursday, the UK will release August Retail Sales, seen path monthly basis. More relevantly, the Bank of England is having a monetary policy meeting. It’s mostly anticipated to be a non-event, as policymakers are expected to keep rates and the APP unchanged, with all of the nine MPC members voting alongside.

GBP/USD short-term technical outlook

The GBP/USD pair trades a handful of pips below the 1.2500 figure, ignoring dollar’s post-Fed strength. From a technical point of view, the risk remains skewed to the upside, as intraday slides were contained by buyers aligned around the 20 SMA, which is anyway losing its upward strength. In the mentioned chart, technical indicators remain within positive levels, the Momentum directionless and the RSI with a modest upward slope which fails to confirm additional gains ahead, something that would be more likely on a break above 1.2545 a strong static resistance area.

Support levels: 1.2460 1.2420 1.2385

Resistance levels: 1.2500 1.2545 1.2590

View Live Chart for the GBP/USD

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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