GBP/USD: benefiting from dollar's weakness

Valeria Bednarik FXStreet

GBP/USD Current price: 1.2649

Boris Johnson remains the favorite in the run to succeed PM May.
BOE's monetary policy decision takes center stage this Thursday.

The GBP/USD pair is ending the day with gains at around 1.2650, having benefited from dollar's weakness. The UK released this Wednesday, May's final inflation figures, which didn't surprise. Annual inflation was confirmed at 2.0%, matching the market's estimates and BOE's latest forecast. Core yearly inflation came in at 1.7% as expected. The kingdom also released the CB Industrial Trends Survey, which showed a contraction in manufacturing output amid a sharp contraction in motor vehicle production. Total orders deteriorated to -15 vs. the -12 expected, its lowest since October 2016. Also, UK Tories MPS had another ballot which ended with Boris Johnson winning again with 143 votes, and just four candidates left.

This Thursday, the UK will release May Retail Sales, seen declining 0.5% when compared to the previous month, and up by 2.7% YoY. More relevant, the Bank of England is having a monetary policy meeting. Carney & Co. had anticipated higher rates coming, although always clarifying that it be at a gradual pace. Brexit uncertainty and political turmoil, have kept policymakers on hold for now. Around the world, however, central banks have taken dovish turns and will be interesting if Carney sticks to its guns.

From a technical point of view, the upside seems more sustained for the GBP/USD pair, as, in the 4 hours chart, it extended its rally above a now directional 20 SMA, while currently battling with the 100 SMA. Technical indicators in the mentioned chart head north well into positive territory. The pair has a strong static resistance in the 1.2670 area, and gains beyond it could result in an extension up to 1.2760, although this last would be a tough bone to break.

Support levels: 1.2610 1.2550 1.2505

Resistance levels: 1.2670 1.2720 1.2760

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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