GBP/USD plummets to fresh three-week low, below 1.2400 amid US CPI-inspired USD strength

GBP/USD witnessed heavy selling for the third successive day amid broad-based USD strength.
Stronger US CPI print for May reaffirmed hawkish Fed expectations and boosted the greenback.
The risk-off impulse further underpinned the safe-haven buck and exerted pressure on the pair.

Haresh Menghani FXStreet

The GBP/USD pair extended this week's rejection slide from the 1.2600 neighbourhood and witnessed some follow-through selling for the third successive day on Friday. The intraday selling picked up pace during the early North American session and dragged spot prices to over a three-week low, below the 1.2400 round-figure mark.

The US dollar added to its intraday gains and shot to the highest level since May 19 in reaction to stronger-than-expected US consumer inflation figures. In fact, the headline US CPI climbed 1.0% MoM in May as against 0.7% expected and the yearly rate jumped to a fresh 40-year high level of 8.6%. Adding to this, core inflation, which excludes food and energy prices, rose 0.6% MoM and 6.0% YoY, surpassing consensus estimates for a reading of 0.5% and 5.9%, respectively.

The data lifted bets for a more aggressive policy tightening by the Fed, which was evident from a sharp spike in the shorter-dated US bond yields. Moreover, the markets are now pricing in a 50 bps rate hike each in June, July and September meetings. This, along with the worsening global economic outlook, triggered a fresh wave of the global risk-aversion trade, which further benefitted the safe-haven buck and contributed to the heavily offered tone surrounding the GBP/USD pair.

From a technical perspective, the intraday break through the previous weekly low, around the 1.2430 area, was seen as a fresh trigger for bearish traders. The subsequent slide and acceptance below the 1.2400 mark might have already set the stage for additional losses towards the 1.2330-1.2325 support. The downward trajectory could further get extended towards the 1.2300 round figure en-route the 1.2240 zone before the GBP/USD pair eventually drops to sub-1.2200 levels.

Technical levels to watch

GBP/USD

Overview
Today last price	1.2396
Today Daily Change	-0.0098
Today Daily Change %	-0.78
Today daily open	1.2494

Trends
Daily SMA20	1.2512
Daily SMA50	1.2666
Daily SMA100	1.3011
Daily SMA200	1.3279

Levels
Previous Daily High	1.2558
Previous Daily Low	1.2487
Previous Weekly High	1.266
Previous Weekly Low	1.2458
Previous Monthly High	1.2667
Previous Monthly Low	1.2155
Daily Fibonacci 38.2%	1.2514
Daily Fibonacci 61.8%	1.2531
Daily Pivot Point S1	1.2468
Daily Pivot Point S2	1.2442
Daily Pivot Point S3	1.2397
Daily Pivot Point R1	1.2539
Daily Pivot Point R2	1.2584
Daily Pivot Point R3	1.261

Author

Haresh Menghani

FXStreet

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

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