GBP/USD hits 2-week lows and rebounds, back around 1.3335 level

Haresh Menghani FXStreet

• UK CPI jumps to the highest level since 2012.
• GBP fails to capitalize on early up-move.
• US PPI eyed for trading impetus.
• FOMC/BoE holds the key.

The GBP/USD pair faded UK CPI-led uptick to 1.3380 level and retreated sharply to 2-week lows in the past hour.

The pair did get a minor boost from today's UK headline CPI print, which peaked above 3% for the first time since 2012, but failed to capitalize on the up-move amid the ongoing Brexit drama. Investors seemed convinced that Brexit uncertainty would force the BoE to go slow with monetary policy tightening and eventually prompted some fresh selling at higher levels.

However, a mildly softer tone around the US Dollar, despite a modest pickup in the US Treasury bond yields, helped limit deeper losses, with the pair quickly rebounding around 20-25 pips from session low level of 1.3310.

Investors also seemed reluctant to place aggressive bets ahead of this week's key event risks, including the highly anticipated FOMC decision on Wednesday and BoE on Thursday.

Apart from the key central bank announcements, UK labor market report and the latest US CPI print would also play a key role in determining the pair's next leg of directional move. In the meantime, today's release of US PPI figures would now be looked upon for some short-term trading impetus.

Technical levels to watch

Weakness below the 1.3300 handle is likely to get extended towards the 1.3275-70 intermediate support before the pair eventually drops to its next major support near the 1.3200 handle.

On the upside, 1.3380 level (session tops), closely followed by the 1.3400 handle, might continue to act as immediate resistance, above which a bout of short-covering could lift the pair towards 1.3435-40 supply zone.

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

EUR/USD stays below 1.1850 after dismal German sentiment data

EUR/USD stays in negative territory below 1.1850 in the second half of the day on Tuesday. Renewed US Dollar strength, combined with a softer risk tone keep the pair undermined alongside downbeat German ZEW sentiment readings for February.

GBP/USD falls toward 1.3550, pressured by weak UK jobs report

GBP/USD remains under bearish pressure and extends its decline below 1.3600 on Tuesday. The United Kingdom employment data suggested worsening labor market conditions, bolstering bets for a BoE interest rate cut next month and making it difficult for Pound Sterling to stay resilient against its peers.

Gold recovers modestly, stays deep in red below $4,950

Gold (XAU/USD) stages a rebound but remains deep in negative territory below $4,950 after touching its weakest level in over a week near $4,850 earlier in the day. Renewed US Dollar strength makes it difficult for XAU/USD to gather recovery momentum despite the risk-averse market atmosphere.

Canada CPI expected to show sticky inflation in January, still above BoC’s target

Economists see the headline CPI rising by 2.4% in a year to January, still above the BoC’s target and matching December’s increase. On a monthly basis, prices are expected to rise by 0.1%.

UK jobs market weakens, bolstering rate cut hopes

In the UK, the latest jobs report made for difficult reading. Nonetheless, this represents yet another reminder for the Bank of England that they need to act swiftly given the collapse in inflation expected over the coming months.

Stellar mixed sentiment caps recovery

Stellar price remains under pressure, trading at $0.170 on Tuesday after failing to close above the key resistance on Sunday. The derivatives metric supports the bearish sentiment, with XLM’s short bets rising among traders and funding rates turning negative.