GBP/USD erases post-UK CPI gains ahead of Fed's decision

UK inflations accelerates unexpectedly in February, ahead of BoE decision.
US Dollar mixed as traders await Federal Reserve's announcements.
GBP/USD retreats from six-week highs toward 1.2200.

Matías Salord FXStreet

The GBP/USD retreated more than 70 pips from the six-week high it reached earlier of 1.2297 and dropped to 1.2218 as Pound's momentum following UK CPI faded, ahead of the Federal Reserve's decision.

Pound erases gains, DXY holds to losses

Earlier on Wednesday, the UK inflation numbers surprised to the upside. The Consumer Price Index rose from 10.1% to 10.4% YoY, against expectations of a modest decline. The unexpected accelerations boosted the Pound, that then gave back all gains.

The inflation numbers increased the pressure on the Bank of England which will announce on Thursday its decision on monetary policy. A 25 bps rate hike is now more firmly expected.

The Fed announces its rate decision at 18:00 GMT. The consensus forecast indicates a 25 bps hike to 4.75% - 5.00%. The statement, the projections and Chair Powell's press conference could be as important as the rate decision considering the uncertainty surrounding the meeting.

Ahead of the meeting, the US Dollar Index is falling 0.15% as US yields move away from daily highs. GBP/USD is hovering around 1.2240 as a weaker US Dollar helped the pair find demand. The bias is still to the upside, with immediate support levels at 1.2220 and 1.2200/05. On the upside, a consolidation above 1.2300 could open the door to more gains.

Technical levels

GBP/USD

Overview
Today last price	1.2243
Today Daily Change	0.0026
Today Daily Change %	0.21
Today daily open	1.2217

Trends
Daily SMA20	1.2046
Daily SMA50	1.2144
Daily SMA100	1.2064
Daily SMA200	1.1893

Levels
Previous Daily High	1.2283
Previous Daily Low	1.2179
Previous Weekly High	1.2204
Previous Weekly Low	1.201
Previous Monthly High	1.2402
Previous Monthly Low	1.1915
Daily Fibonacci 38.2%	1.2218
Daily Fibonacci 61.8%	1.2243
Daily Pivot Point S1	1.217
Daily Pivot Point S2	1.2122
Daily Pivot Point S3	1.2066
Daily Pivot Point R1	1.2274
Daily Pivot Point R2	1.233
Daily Pivot Point R3	1.2378

Author

Matías Salord

FXStreet

Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.

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