GBP/USD bulls take a breather around 1.1330 with eyes on US Retail Sales, Michigan CSI

GBP/USD steadies nearly weekly top after rising the most in a fortnight.
UK politics, US inflation surprisingly favored bulls despite hawkish Fed bets.
More clarity on the British mini-budget appears necessary to keep buyers on the table.
Risk-negative headlines and firmer expectations from US consumer-centric data can recall the cable bears.

Anil Panchal FXStreet

GBP/USD seesaws near 1.1330 as bulls await fresh catalysts to extend the biggest daily jump in two weeks. In doing so, the Cable pair pauses the two-day uptrend around the weekly top.

A slight clarity on the UK government’s mini-budget, as well as the US dollar’s broad declines, could be linked to the quote’s latest run-up. On the same line were the hopes of the Bank of England’s (BOE) hawkish move.

On Thursday, UK Finance Minister Kwasi Kwarteng told BBC that he is focused on delivering on the mini-budget to get growth going again. On the same line, Prime Minister Liz Truss’ office also confirmed no more U-turns from the mini-budget. It’s worth noting that UK Chancellor Kwarteng’s surprise cancellation of the speech and passing the buck on the BOE if the British markets collapse might have also offered indirect support to the GBP/USD prices.

That said, the quote rallied the most in a fortnight despite the 40-year high print of the US Core Consumer Price Index (CPI). On Thursday, the US CPI rose to 8.2% versus 8.1% market forecasts but eased as compared to the 8.3% prior. The CPI ex Food & Energy, mostly known as the Core CPI, jumped to 6.6% while crossing the 6.5% expectations and 6.3% previous readings.

It’s worth noting that the money markets’ wagers on the 75 bps Fed rate hike and a jump in Wall Street seemed to also have played their role in fueling the GBP/USD prices.

Moving on, the risk catalysts are likely to direct immediate GBP/USD moves as there are more challenges to the latest run-up. Among them are the hawkish Fed bets, fears of UK markets’ collapse and the fresh covid fears.

However, major attention will be given to the US Retail Sales for September, the preliminary readings of the Michigan Consumer Sentiment Index (CSI) and the University of Michigan’s (UoM) 5-year Consumer Inflation Expectations for October.

Also read: US Retail Sales Preview: Positive surprises eyed for dollar bulls to regain poise

Technical analysis

Despite crossing the 21-DMA hurdle, now immediate support around 1.1160, a monthly resistance line, close to 1.1390 by the press time, challenges the GBP/USD buyers.

Additional important levels

Overview
Today last price	1.132
Today Daily Change	0.0218
Today Daily Change %	1.96%
Today daily open	1.1102

Trends
Daily SMA20	1.1158
Daily SMA50	1.1549
Daily SMA100	1.1875
Daily SMA200	1.2501

Levels
Previous Daily High	1.1134
Previous Daily Low	1.0924
Previous Weekly High	1.1496
Previous Weekly Low	1.1055
Previous Monthly High	1.1738
Previous Monthly Low	1.0339
Daily Fibonacci 38.2%	1.1054
Daily Fibonacci 61.8%	1.1004
Daily Pivot Point S1	1.0972
Daily Pivot Point S2	1.0843
Daily Pivot Point S3	1.0762
Daily Pivot Point R1	1.1183
Daily Pivot Point R2	1.1263
Daily Pivot Point R3	1.1393

Author

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

AUD/USD holds above 0.6950 as bullish USD caps gains

AUD/USD edges lower during the Asian session on Tuesday, stalling a two-day recovery move from a two-month low, touched last week. An extended rout in the fixed income market keeps US bond yields elevated near multi-year highs. This, along with geopolitical uncertainties, helps the US Dollar retain its bullish tone despite receding October Fed hike bets. However, expectations for another RBA rate hike this month could act as a tailwind for the Aussie.

USD/JPY rises back above 158.00 despite hawkish BoJ outlook

USD/JPY rises back above 158.00 in the early European morning on Tuesday. The pair strengthens as the Japanese Yen fails to find any inspiration from hawkish BoJ expectations and looming intervention risks. Meanwhile, geopolitical uncertainty and elevated US bond yields keep the US Dollar near its YTD high despite receding October Fed hike bets. This, in turn, helps the pair stay supported.

$4,100: For how long can Gold defend that level?

Gold resumes the recent downtrend, approaching $4,100 early Tuesday. The US Dollar consolidates near 17-month highs amid high Treasury yields and a rebound in oil prices. From a short-term technical view, Gold’s path of least resistance appears to be down.

Zcash: NU7 upgrade sets the stage for ZEC to resume its rally

Zcash (ZEC) hovers around $1,348 at press time on Tuesday, sustaining its mild gains from Sunday. The network upgrade NU7 went live on Monday, boosting transaction speed and redirecting 60% of transaction fees into future rewards. The institutional outflow eased to roughly $3.50 million on Monday, down from $93.56 million last week, suggesting reduced pressure from redemptions.

The scarcity trade is gaining momentum – The biggest commodity moves may still be ahead

Something extraordinary is happening across global Commodity markets. Oil is above $100. Diesel has reached record prices. Copper has broken records. Global food prices are rising again. China is restricting fuel exports. Governments are releasing emergency reserves.

Eurozone inflation just hit 3.8%, its highest in three years. This chart shows why the ECB can’t simply hike its way out

The ECB would normally have a relatively straightforward answer to inflation running almost twice its target: raise interest rates. But these are not normal circumstances. This time, the bond market is already doing part of the tightening for it, leaving the ECB facing an increasingly difficult dilemma.