• USD gains traction after strong headline CPI figures.
• Traders shrug off weaker US retail sales data.
• Bulls trying hard to defend 1.3800 handle.
The GBP/USD pair maintained its heavily offered tone through the early NA session and tumbled to 1.3800 handle post-US economic releases.
The US Dollar surged across the board after data released from the US showed headline CPI jumped more than expected by 0.5% m-o-m during January, with yearly rate also bettering expectations and holding above the Fed's 2.0% target.
A hotter-than-expected CPI data helped offset weaker monthly retail sales data, coming in to show an unexpected contraction of 0.3% m-o-m during January, and attracted some fresh selling pressure around the major.
The selling pressure, however, seems to have abated near the 1.3800 handle, at least for the time being, with the pair quickly rebounding around 25-30 pips from session lows.
Currently trading around the 1.3830 region, indications of a sharp fall in the US equity markets should now underpin the greenback's safe-haven demand and might continue exerting some downward pressure during the NY trading session.
Technical outlook
Valeria Bednarik, American Chief Analyst at FXStreet writes, “the 4 hours chart presents a neutral stance ahead of the event, as the price is a few pips above its 20 SMA and 200 EMA, both converging at 1.3850, while technical indicators lack directional strength, stuck around their mid-lines. The pair would need to settle above 1.3920 to be able to gain further bullish traction, although limited by the 1.4000 threshold.”
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