- The GBP/USD continued rising and reached a high of 1.4006 amid a new wave of US dollar sales.
- US stocks are on the rise, leading the risk-rally.
The sell-off of the US dollar further extends in the US afternoon, sending the GBP/USD to levels last seen last Thursday. The pair is rising in tandem with US stocks. After starting modestly lower, shares have increased in Wall Street. The market mood improved as the VIX volatility index slipped to the lower ground, implying lower risk.
Earlier, the release of the US inflation report triggered a strengthening of the US dollar and a drop of GBP/USD to 1.3800. The Consumer Price Index rose more than expected in January. Core CPI is up 1.8% y/y, and headline inflation is up 2.1%. The quicker rise in prices led investors to price in a higher chance of four rate hikes by the Federal Reserve in 2018.
The inflation report was accompanied by the retail sales release which showed disappointing results, leading to significant downgrades of growth forecasts for the first quarter of 2018.
The next events on the economic calendar are the releases in the US: PPI, the Philadelphia and New York manufacturing indices and jobless claims are the highlights on Thursday.
GBP/USD Technical Outlook
The technical picture is slightly positive for the pair. The RSI on the daily chart is above 50 points, and momentum is modestly positive. The pair touched the 50-day SMA at 1.4006, which serves as resistance.
Further above, the high of February 8th at 1.4060 is the next line of resistance, followed by 1.4280, which capped the pair in early February.
Looking down, 1.3920 capped the pair yesterday and now switches to a support line. The swing-low of 1.38 is the next line to watch.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these securities. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Forex involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.