- 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.
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.
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