GBP/USD extends recovery towards 1.2500 on better-than-forecast UK inflation, BoE’s Bailey, Fed Minutes eyed

GBP/USD picks up bids to refresh intraday high as UK inflation for April offers positive surprise.
UK CPI marks 8.7% YoY numbers for April versus 10.1% prior, 8.2% expected.
Pound Sterling benefits from US Dollar’s retreat amid an impasse in debt ceiling talks.
BoE’s Bailey needs to defend hawkish bias to favor Cable buyers.

Anil Panchal FXStreet

GBP/USD renews intraday high near 1.2465 as the UK’s inflation numbers rose more than expected in April. Adding strength to the Cable pair’s latest run-up could be the US Dollar’s retreat ahead of the key data/events, as well as due to fresh fears of US default.

That said, the UK’s inflation, per the Consumer Price Index (CPI) gauge, rose 8.7% YoY in April compared to 10.1% marked in the last month and 8.2% forecasts.

Also read: Breaking: UK annualized CPI inflation falls to 8.7% in April vs. 8.2% expected

The strong inflation data justifies the latest hawkish bias of the Bank of England (BoE) officials including Governor Andrew Bailey, during the previous day’s BoE Monetary Policy Hearings. The same allows the Pound Sterling to brace for the biggest daily gain in a week.

Apart from the UK data, the US Dollar’s weakness also favors the GBP/USD buyers as the US Dollar Index (DXY) snaps a two-day winning streak as it prints mild losses around 103.45 by the press time. While tracing the USD’s recent retreat, the ongoing US debt ceiling drama gains major attention as policymakers recently struggle to justify the hopes of avoiding default.

On the contrary, firmer prints of the US data and hawkish Fed concerns challenge the Cable pair buyers. That said, the odds of witnessing a 0.25% rate hike in June’s Fed meeting recently increased and allow the US Dollar to remain firmer.

Talking about the sentiment, the risk profile remains dicey as S&P500 Futures ignore Wall Street’s downbeat performance to print mild gains whereas the US 10-year and two-year Treasury bond yields retreated from the highest levels since early March the previous day.

Having witnessed the initial reaction to the UK inflation numbers, the GBP/USD pair may witness a lackluster session as traders could turn cautious ahead of a speech from BoE Governor Andrew Bailey and Minutes of the latest Federal Open Market Committee (FOMC) Monetary Policy Meeting.

Technical analysis

A daily closing beyond the 50-DMA hurdle of around 1.2430 becomes necessary to defend the GBP/USD pair’s latest run-up.

Additional important levels

Overview
Today last price	1.2437
Today Daily Change	0.0026
Today Daily Change %	0.21%
Today daily open	1.2411

Trends
Daily SMA20	1.2515
Daily SMA50	1.2421
Daily SMA100	1.2278
Daily SMA200	1.1972

Levels
Previous Daily High	1.2446
Previous Daily Low	1.2373
Previous Weekly High	1.2547
Previous Weekly Low	1.2392
Previous Monthly High	1.2584
Previous Monthly Low	1.2275
Daily Fibonacci 38.2%	1.2401
Daily Fibonacci 61.8%	1.2418
Daily Pivot Point S1	1.2374
Daily Pivot Point S2	1.2337
Daily Pivot Point S3	1.23
Daily Pivot Point R1	1.2448
Daily Pivot Point R2	1.2484
Daily Pivot Point R3	1.2521

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.

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