The GBP/USD pair entered a consolidative mode, following the upward spike to fresh weekly tops reached at 1.3266 levels, as attention turns towards the BOE credit conditions survey and US PPI data for fresh trading impetus today.
GBP/USD headed for the first weekly rise in four weeks
The spot takes on its recovery-mode into a fifth day today, as the greenback extends its recent downward trajectory across its main competitors, with the USD index now printing fresh two-week lows at 92.67 levels.
The declines seen in the US dollar across the board picked-up pace after the FOMC Sept meeting minutes was read as dovish and hence, disappointed the hawks. The minutes showed that the Fed members see the "period" of low inflation not just being transitory.
Meanwhile, narrowing monetary policy divergence between the Fed and BOE, especially after yesterday’s FOMC minutes release and ongoing BOE Nov rate hike talks, also keep the sentiment around the pound buoyed. According to Reuters, money markets are already pricing in more than 75% probability of a Nov BOE rate hike.
Later today, the key risk events for the GBP/USD pair remain the US factory gate inflation numbers and Fedspeaks, which will have a major impact on the USD moves.
GBP/USD Technical View
Valeria Bednarik, Chief Analyst at FXStreet noted: “According to the 4 hours chart, the risk is lean towards the downside, as the price is stuck around the 50% retracement of its last week's decline, having held for a second consecutive week above the 38.2% retracement of the same slide at 1.13170, and with the 20 SMA gaining upward strength below this last. Technical indicators have opposite directions, but within positive territory, with the RSI heading north around 58, also favoring a new leg higher, particularly on an extension above 1.3230, the immediate resistance. Support levels: 1.3170 1.3130 1.3090 Resistance levels: 1.3230 1.3260 1.3300.”
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