• US prices paid by consumers and producers continue rising, further cementing the need for a 50 bps Federal Reserve hike.
  • UK Inflation Rate at its highest in 30 years, hits 7%.
  • GBP/USD Price Forecast: Double bottom near the YTD lows looms as cable rallies towards 1.3100.

The British pound rallies and recovers substantial ground, in the North American session, amidst an upbeat market mood, despite continuing fighting between Ukraine and Russia and a busy week for the US economic docket weighed by inflationary measurements weighing on the greenback. At the time of writing, the GBP/USD is trading at 1.3098.

The US docket witnessed the Consumer Price Index (CPI) on Tuesday, which rose above the 8.5% threshold for the first time since 1981, while inflation excluding food and energy, the so-called core CPI, rose by 6.5%, lower than the 6.7% estimated. The figures show that inflation is stubbornly high, but the core CPI showed that, in fact, prices easied in comparison with forecasts. That spurred a reaction in money market futures derivatives, as traders easied the 220 basis points Fed aggressive tightening to 200 by the end of the year.

In the meantime, on Wednesday, prices paid by producers (PPI) in March rose 11.4% y/y, the most since 2010, above all estimations and emphasizing inflation is stickier than expected, as producers are about to pass costs to customers. Excluding volatile items like food and energy, the so-called core PPI rose 9.2% y/y, higher than the 8.8% foreseen, in contrast to the last core CPI report, which showed that inflation might be near peaking.

Sources cited by Bloomberg said that “[D] despite the sigh of relief from yesterday’s core CPI reading, this is concerning,” and added that a “50 bps is starting to feel commonplace.”

Elsewhere, the UK economic docket also featured inflation figures, led by the Inflation Rate for March, which expanded by 7%, in line with expectations but higher than the March 6.2%, the highest in 30 years.

Money market futures have priced in a 25 bps rate hike by the Bank of England’s meeting on May 5. However, it’s worth noting that Deputy Governor Jon Cunliffe voted for no change at its last meeting, a move widely unexpected by investors, which weighed on the GBP prospects and pushed cable towards its YTD low around 1.2979.

GBP/USD Price Forecast: Technical outlook

The GBP/USD appears to have formed a double bottom in the daily chart, but as long as the daily moving averages (DMAs) reside above the exchange rate, the pair is downward biased. Nevertheless, it's worth noting the aforementioned.

If GBP/USD bulls lift prices above March 23 1.3298 swing high, then the double bottom could be confirmed and would target 1.3600.

The GBP/USD first resistance would be 1.3100. A breach of the latter would expose the December 2021, 1.3160 pivot low-now-resistance, followed by the 1.3200 figure. Once cleared, that would open the door towards 1.3298, March 23 cycle high.

GBP/USD

Overview
Today last price 1.3098
Today Daily Change 0.0098
Today Daily Change % 0.75
Today daily open 1.3
 
Trends
Daily SMA20 1.3121
Daily SMA50 1.3291
Daily SMA100 1.3357
Daily SMA200 1.3533
 
Levels
Previous Daily High 1.3054
Previous Daily Low 1.2994
Previous Weekly High 1.3167
Previous Weekly Low 1.2982
Previous Monthly High 1.3438
Previous Monthly Low 1.3
Daily Fibonacci 38.2% 1.3017
Daily Fibonacci 61.8% 1.3031
Daily Pivot Point S1 1.2978
Daily Pivot Point S2 1.2956
Daily Pivot Point S3 1.2918
Daily Pivot Point R1 1.3039
Daily Pivot Point R2 1.3077
Daily Pivot Point R3 1.3099

 

 

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 assets. 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 Open Markets 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. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news Join Telegram

Recommended content


Recommended content

Editors’ Picks

EUR/USD steadies near 1.0550, looks to post modest weekly gains

EUR/USD steadies near 1.0550, looks to post modest weekly gains

EUR/USD has lost its bullish momentum after having climbed above 1.0570 with the initial reaction to the US data in the American session and retreated toward the mid-1.0500s. On a weekly basis, the pair remains on track to close in positive territory. 

EUR/USD News

GBP/USD struggles to hold above 1.2300

GBP/USD struggles to hold above 1.2300

GBP/USD has edged lower following a jump above 1.2300 in the early American session on Friday. The market mood remains upbeat ahead of the weekend with Wall Street's main indexes posting strong daily gains on upbeat US data. 

GBP/USD News

Gold stays below $1,830 as US yields edge higher

Gold stays below $1,830 as US yields edge higher

Gold continues to fluctuate below $1,830 on Friday and looks to close the second straight week in negative territory. Fueled by the risk-positive market environment, the benchmark 10-year US Treasury bond yield is up more than 1% on the day, limiting XAU/USD's upside.

Gold News

Why Cardano could surprise over the weekend

Why Cardano could surprise over the weekend

ADA  set to close out the week with a gain on the workday trading week and over the weekend? Central banks signaled that the rate hike cycle is ending, meaning less stress and tight conditions for trading, opening up room for some upside potential with Cardano set to pop above $0.55 and test a significant cap.

Read more

FXStreet Premium users exceed expectations

FXStreet Premium users exceed expectations

Tap into our 20 years Forex trading experience and get ahead of the markets. Maximize our actionable content, be part of our community, and chat with our experts. Join FXStreet Premium today!

BECOME PREMIUM

Forex MAJORS

Cryptocurrencies

Signatures