GBP/USD analysis: Pound strong, despite less chances of a BOE's hike

Valeria Bednarik FXStreet

GBP/USD Current price: 1.3772

UK CPI eased from record peaks, but still at 3.0% YoY.
Dollar weakness persists amid absence of fresh clues.

The Pound traded with a sour tone during the first half of the day, with the decline partly exacerbated by UK inflation figures for December. The CPI was down for the first time in six month, advancing anyway 3.0% YoY from previous 3.1%. Core inflation was 2.5% vs. previous 2.7%, suggesting that it may finally be easing after peaking in 2017. The figures need further confirmation, but it inflationary pressures continue easing, chances of a BOE rate hike will decrease even further. Inflation at factory gates, however, rose above expected, with output prices up 3.3%, above the 2.9% expected or the previous 3.1%. The pair fell to 1.3741 with the headlines, but the Sterling recovered its poise afterward, with the GBP/USD pair stabilizing in the 1.3770 region. Technically, the 4 hours chart shows that the Momentum keeps easing within positive territory, but also that the 20 SMA maintains its bullish slope far below the current level, while the RSI hovers in overbought territory leaning the scale towards the upside. As commented on a previous update the pair has a strong static resistance area around 1.3835, February 2016 low, now the level to surpass to consider a steeper recovery ahead.

Support levels: 1.3740 1.3700 1.3660

Resistance levels: 1.3800 1.3835 1.3860

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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