GBP/USD analysis: recovering on dollar's sell-off, but beware of Brexit headlines

GBP/USD Current price: 1.3174

  • UK inflation giving signs of having peaked.
  • Wages data on Wednesday to make it or break it for Pound.

The GBP/USD pair recovered ground this Tuesday, reaching 1.3186 mid-US session, on the back of dollar's persistent weakness, finally closing its weekly opening gap.  The British Pound hovered between gains and losses during the European morning, as investors tried to digest UK inflation data. The Consumer Price index came in at 3.0% YoY in October, better than the 3.1% expected. Inflation at factory gates rose 2.8% on the year to October, down from 3.3% in September. The readings are somehow encouraging, as the inflation escalation post-Brexit seems to have peaked, although at the same time, means that the BOE won't need to raise rates at a faster pace. This Wednesday, the UK will publish its latest employment figures, with focus on wages' growth, as salaries have been lagging well-beyond inflation. Better-than-expected wages will bright some further relief to Pound bulls. The risk, however, is still Brexit, and headlines regarding the ongoing negotiations. From a technical point of view, the 4 hours chart shows that the price has broken above the 50% retracement of the latest daily decline and  hovers Monday's high, while the RSI  indicator accelerated north, now around 58, all of which favors a new leg higher, despite the Momentum holds flat around its 100 level.  

 Support levels: 1.3130 1.3095 1.3060

Resistance levels: 1.3185 1.3220 1.3260

View Live Chart for the GBP/USD


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