GBP/USD bulls flirt with 1.3800 around monthly high, focus on UK inflation


  • GBP/USD grinds higher around five-week top after cheering broad US dollar weakness.
  • BOE rate hike concerns joined risk-on mood to favor bulls.
  • UK coronavirus fears, Brexit jitters challenge upside ahead of British CPI for September.
  • US stimulus, Fed tapering concerns may also entertain traders.

GBP/USD seesaws around 1.3800 as traders brace for the key inflation data during Wednesday’s Asian session. The cable pair cheered hopes of the Bank of England’s (BOE) rate hike, as well as broad US dollar weakness, to refresh the multi-day high the previous day. However, challenges surrounding the UK’s covid conditions and Brexit woes probed the bulls.

Bloomberg quotes BOE Governor Andrew Bailey’s latest comments to highlight the rate hike chatters. “Speaking to an online panel organized by the Group of 30, Bailey said that while central banks don’t have the tools to counter supply disruptions and he still believes the recent acceleration of inflation will be temporary, officials need to seek to prevent higher inflation expectations from becoming entrenched,” said the news.

On a different page, the US dollar eased after the downbeat housing data cooled down tapering tantrums. US Housing Starts registered a sharp fall in September, -1.6% MoM versus +1.2% prior, whereas the Building Permits registered the largest contraction since February, down 7.7% compared to 5.6% previous readouts. That being said, the US Dollar Index (DXY) dropped to a three-week low before consolidating losses around 93.77 at the latest.

It’s worth noting that the risk-on mood helped the Wall Street benchmarks to poke record tops whereas the US 10-year Treasury yields gained 5.7 basis points (bps) to rise to the highest levels since late May by the end of Tuesday’s North American session.

Alternatively, the UK recorded the highest coronavirus-led daily death numbers since March 9 the previous day. “The weekly rate of new reported cases of Covid-19 in the UK is one of the highest in the world, having jumped from 367 cases per 100,000 people at the start of October to its current level of 463 per 100,000,” said the HuffPost UK.

Also negative for the GBP/USD prices were Brexit headlines quoting UK Minister David Frost who pushes the bloc for easing controls over the Northern Ireland (NI) border. However, UK PM Boris Johnson sounds optimistic noting job losses and disruption to capital flows have been lower than feared, per Bloomberg.

Given the latest supply crunch and fresh reflation chatters, any uptick in the UK CPI, expected to remain unchanged at 3.2% YoY in September, may well anchor the expectations of a BOE rate hike in 2021, which in turn could propel the GBP/USD further towards the north.

Read: UK September CPI Inflation Preview: Will rising price pressures boost British pound?

Technical analysis

In addition to the 100 and 200-DMA, respectively around 1.3810 and 1.3850, a downward sloping resistance line from July 30, close to 1.3860, also challenges GBP/USD upside. However, sellers may refrain from fresh entries until the quote stays beyond the 50-DMA level surrounding 1.3710.

Additional important levels

Overview
Today last price 1.3795
Today Daily Change 0.0068
Today Daily Change % 0.50%
Today daily open 1.3727
 
Trends
Daily SMA20 1.3621
Daily SMA50 1.3716
Daily SMA100 1.3815
Daily SMA200 1.3847
 
Levels
Previous Daily High 1.3766
Previous Daily Low 1.3709
Previous Weekly High 1.3773
Previous Weekly Low 1.3568
Previous Monthly High 1.3913
Previous Monthly Low 1.3412
Daily Fibonacci 38.2% 1.3731
Daily Fibonacci 61.8% 1.3744
Daily Pivot Point S1 1.3702
Daily Pivot Point S2 1.3678
Daily Pivot Point S3 1.3646
Daily Pivot Point R1 1.3759
Daily Pivot Point R2 1.379
Daily Pivot Point R3 1.3815

 

 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news

Latest Forex News


Latest Forex News

Editors’ Picks

EUR/USD climbs above 1.1250 as investors eye coronavirus headlines

EUR/USD preserved its recovery momentum early Friday and rose above 1.1250 during the European trading hours. Markets are doubting the Fed's policy tightening prospects as the new coronavirus variant revives concerns over the economic recovery losing steam.

EUR/USD News

GBP/USD rebounds toward mid-1.3300s on broad dollar weakness

GBP/USD reversed its direction after dipping below 1.3300 earlier in the day and started to push higher toward 1.3350. The greenback is facing heavy selling pressure amid the sharp decline witnessed in the 10-year US Treasury bond yield.

GBP/USD News

Gold clings to strong gains above $1,800 as US T-bond yields plunge Premium

Gold staged a decisive rebound on Friday and reclaimed $1,800. The intense flight to safety is causing US Treasury bond yields to fall sharply and fueling XAU/USD's rally. Investors await news on vaccines' effectiveness against the new COVID variant.

Gold News

Cardano could tank to $1 if ADA fails to defend crucial support

Cardano price is currently hovering below a freshly shattered 6-hour demand zone, ranging from $1.68 to $1.79. This resulting crash could extend to the immediate and critical foothold at $1.40. 

Read more

Black Friday 2021 Discounts!

Do you want to take your trading skills to the next level? Now you have a chance of leaping forward at attractive introductory rates. For Black Friday, FXStreet is offering discounts of up to 50% on its upgraded Premium plans. 

Subscribe now!

Forex MAJORS

Cryptocurrencies

Signatures