The offered tone behind the greenback strengthened sharply in the Asian trades, sending the GBP/USD pair northwards, in a bid to regain 1.31 handle ahead of the UK CPI release.
GBP/USD: Focus shifts to UK CPI
The spot caught a sudden bid-wave and broke sharply higher from its overnight bearish consolidation phase, after the US dollar slumped to fresh ten-month lows versus its main competitors on the Trumpcare bill debacle.
Moreover, narrowing monetary policy divergence between the Fed and BOE, especially after last week’s dovish Yellen’s remarks and downbeat slew of US macro releases, bolsters the latest move higher in the GBP/USD pair.
However, negative Asian equities is somewhat weighing negatively on the risk currency GBP, keeping the gains just shy of 1.31 handle. Also, the GBP traders remain unnerved ahead of the UK inflation data, which could throw a fresh light on the BOE’s rate hike prospects this year. Inflation in the UK has overshot the BOE’s 2% target, coming in at 2.9% in last month’s release.
GBP/USD levels to consider
Valeria Bednarik, Chief Analyst at FXStreet noted, “ In the 4 hours chart, technical indicators have corrected extreme overbought conditions, heading modestly lower within positive territory, whilst the 20 SMA maintains its bullish slope below the current level, converging with the 38.2% retracement of the mentioned rally at 1.2295, a probable bearish target in the case of further Pound's weakness. Support levels: 1.3050 1.3010 1.2965 Resistance levels: 1.3120 1.3160 1.3200.”
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