• The GBP/USD drops almost 0.05% amidst a risk-off impulse while the US dollar weakens.
  • US prices paid by producers easied, while unemployment claims jumped for the second consecutive week.
  • GBP/USD Price Analysis: Retreated from a descending-channel trendline, eyes a break below 1.2200.

GBP/USD edges lower off the weekly highs around 1.2276 near a top-trendline of a descending channel, amidst an upbeat sentiment spurred by a cooler-than-expected US inflation report, now on the side of producers. Further, the US labor market shows signs of ease, weighing on the greenback, underpinned by a hawkish Fed from YTD.

That said, the GBP/USD is trading at 1.2204, down almost 0.05%. Earlier in the day, the pound retraced some of Wednesday’s gains, reaching a daily low at 1.2182, before hitting a daily high at 1.2249. Nevertheless, once the dust settled, cable meanders around current price levels.

The US Department of Labor released another piece of the puzzle regarding inflation. The Producer Price Index (PPI), also known as prices paid by producers, rose by 9.8% YoY, less than the 10.4% estimates and less than June’s reading. In the meantime, the so-called core PPI, which excludes volatile items, followed suit, increasing by 7.6%, unchanged compared to forecasts, but 0.3% less than the previous month.

The data suggests that inflationary pressures on the wholesale side have begun to ease. That would temper the pace of prices paid by consumers in upcoming months. Additionally, the survey added that there are indications that supply-chain conditions are improving.

At the same time, the US Initial Jobless Claims for the week ending on August 6 jumped by 262K less than forecast but rose for the second-consecutive week.

On the UK’s side, the Bank of England (BoE) Chief Economist Huw Pill said that the bank would need to double down on the 2% inflation target on Wednesday. He added that “higher rates in the short term” could also mean some “slowing in the economy.”

Given that the Bank of England has hiked six times since December 2021, Pill added that the effects of measures taken would be felt at the end of 2023.

Earlier in the week, BoE’s Deputy Governor Dave Ramsden backed the BoE’s plan to sell its stock of Gilts, even if an economic slowdown “forces” the bank to cut rates.

Dave Ramsden said that he backs up the need to raise rates further while adding that due to the “extraordinary period where a lot is changing,” he won’t make predictions of where the Bank Rate will end.

What to watch

Friday’s UK calendar is packed, reporting GDP, Industrial Production, and the Balance of Trade. On the US front, the University of Michigan Consumer Sentiment, alongside inflation expectations.

GBP/USD Price Analysis: Technical outlook

The GBP/USD exchange rate is located near a two-month-old top-trendline of a descending channel, briefly broken yesterday. However, the false breakout is a sign of buyers’ weakness, with the spot price tumbling within the boundaries of the previously mentioned channel, opening the door for selling pressure.

To the upside, the GBP/USD crucial ceiling level to break would be 1.2300. Once cleared, it could send the pair towards the 100-day EMA at 1.2432. On the flip side, a breach of 1.2200 would pave the way toward the 20-day EMA at 1.2085.

GBP/USD

Overview
Today last price 1.2202
Today Daily Change -0.0013
Today Daily Change % -0.11
Today daily open 1.2215
 
Trends
Daily SMA20 1.2066
Daily SMA50 1.2153
Daily SMA100 1.2445
Daily SMA200 1.2926
 
Levels
Previous Daily High 1.2277
Previous Daily Low 1.2065
Previous Weekly High 1.2294
Previous Weekly Low 1.2003
Previous Monthly High 1.2246
Previous Monthly Low 1.176
Daily Fibonacci 38.2% 1.2196
Daily Fibonacci 61.8% 1.2146
Daily Pivot Point S1 1.2094
Daily Pivot Point S2 1.1974
Daily Pivot Point S3 1.1883
Daily Pivot Point R1 1.2306
Daily Pivot Point R2 1.2397
Daily Pivot Point R3 1.2518

 

 

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