GBP/USD maintains latest recovery ahead of UK inflation

The GBP/USD pair is near 1.2900 mark on early Wednesday.
The pair extends Tuesday’s gains earned through concern of soft Brexit and less dovish BoE.
The headline inflation data will be the next in Pound traders’ radar for fresh impulse.

Anil Panchal FXStreet

The British Pound (GBP) trades in a positive territory near 1.2900 against the US Dollar heading towards European sessions on Wednesday. The GBP/USD pair bounced off the three week low on Tuesday amid speculations of delayed Brexit whereas absence of additional dovish comments from the BoE Governor offered additional strength to the buyers. Investors now aim for monthly readings of the UK headline inflation data in order to determine near-term Cable moves.

Reuters reported that the UK Prime Minister Theresa May told parliament members to give her more time to negotiate a fresh deal with EU leaders. The news said she also denied previously scheduled voting on renewed Brexit plan in the parliament during this week. The news gave a sigh of relief to the soft Brexit expectations and strengthened the GBP/USD pair, mostly known as the Cable.

Adding to the upside momentum yesterday was Bank of England (BoE) Governor Mark Carney’s refrain to provide any fresh bearish signals for the future policy moves while talking in London.

Looking forward, the January month consumer price index (CPI) for the UK will be getting immediate attention of the Pound traders. The headline CPI YoY is expected to take a step back to 1.9% from the 2.1% registered during the December last-year whereas monthly figure may slid into contraction region to -0.7% from +0.2% marked the previous month.

With the inflation numbers likely being another top-tier data to convey weakness in the UK economy, after early week’s GDP, chances of the GBP to trim some of its latest gains can’t be denied. Though, positive sentiment surrounding delayed and/or soft Brexit guards the Cable’s downside.

GBP/USD Technical Analysis

Break of two-week old resistance-line signals the GBP/USD’s further upside to the 1.2930 and the 1.2980 whereas 1.3000 and the 1.3040 may flash on optimists’ radar then after.

During the pair’s pullback, the 1.2870 and the 1.2830 can entertain sellers ahead of pleasing them with 1.2800.

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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