The GBP/USD pair once again faced rejection and faded US CPI-led bullish spike to 1.2300 neighborhood.
Currently trading around 1.2270-75 region, the pair jumped to 1.2295 level after US core CPI, which excludes volatile food and energy items, fell short of expectations and came-in to show a rise of 0.1% m-o-m for September. Meanwhile, the headline CPI matched expectations and recorded a monthly rise of 0.3%, taking the yearly inflation rate to 1.5%.
The pair, however, failed to extend the momentum and quickly retraced amid lack of follow through buying interest as market participants now look forward to other important UK macro releases, including monthly employment report and retail sales data, scheduled for release on Wednesday and Thursday respectively.
Technical outlook
Valeria Bednarik, Chief Analyst at FXStreet, notes, "Technically, the 4 hours chart for the GBP/USD pair presents a modest bullish stance, given that the pair has advanced above its 20 SMA that anyway remains flat around 1.2200, while technical indicators have entered positive territory, although the RSI is losing upward momentum around 52, indicating limited upward strength."
"The pair has multiple intraday highs in the 1.2270 region for these last two weeks, which means that it will take a clear break beyond it to confirm another leg higher, up to the 1.2330/50 region. However, if the pair eases back below the 1.2200 level, the risk is back towards the downside, with scope to test 1.2130/60 during the American afternoon."
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