GBP/USD: Recovery towards 1.3100 on its way ahead of UK CPI

GBP/USD recovers from a nine-week-old ascending trend-line as it trades near 1.3055 ahead of the London open on Wednesday. Absence of negative Brexit news reports and support from data front seemed to have played their roles while traders await the British inflation numbers.

Off-late the flow of Brexit updates has been light due to the Easter recess in the UK parliament. However, chatters of slow progress in the cross-party talks and members of the parliaments (MPs) to get a vote to over the EU customs union pact gained market attention.

On the economic side, higher than expected claimant count change and soft average earnings excluding bonus from the UK confronted with the US industrial production which dropped to -0.1% versus +0.2% expected.

Moving on, March month consumer prices index (CPI) from the UK and February month trade balance figures from the US will be up on the market’s radar.

The British inflation figure is expected to increase by 2.0% from 1.9% on a YoY basis whereas the US trade balance could register higher than the previous $-51.1 billion deficit of $-53.7 billion.

It should also be noted that market risk tone has been positive recently due to China’s upbeat data-dump. The US 10-year government bond yields are near to the highest since mid-NMarch by being around 2.56%.

GBP/USD Technical Analysis

An upward sloping support-line stretched since February 14, at 1.3030, restricts the pair’s near-term declines, a break of which can highlight 200-day simple moving average (SMA) level of 1.2970 and 1.2950 including 100-day SMA.

Alternatively, 50-day SMA and a five-week long descending trend-line around 1.3100 – 1.3105 seems a tough resistance on the upside. In a case where prices rally beyond 1.3105, 1.3130 and 1.3200 may come back on the chart.