GBP/USD reverses daily gains after US data

The GBP/USD pair extended its reversal from session high level near 1.2230 region and erased all of its daily gains after US economic releases.

Currently trading around mid-1.2100s, spot accelerated downslide after US core PPI print surprised on the upside and came-in to show a monthly rise of 0.2% as compared to 0.1% expected, taking the yearly rate to 1.6% (1.5% expected). Meanwhile, the headline PPI reading matched consensus estimates of 0.3% m-o-m and 1.6% y-o-y rise. 

A higher-than-expected rise in price at producers’ level seems to have revived expectations of higher consumer price inflation and seems to have negated a slight disappointment from the headline retail sales number. The US monthly retail sales recorded m-o-m growth of 0.6%, which was slightly lower than 0.7% growth expected. The reading, however, was much better-than previous month's dismal growth of 0.1% and was probably taken positively by the markets. 

Meanwhile, sell on rally trade around the British Pound maintained its dominance amid ongoing concerns of a 'hard Brexit' and also collaborated to a fresh bout of selling pressure around the major.

Later during NY session, Prelim UoM Consumer Sentiment for January would now be looked upon for additional respite for the US Dollar and might attract a follow through selling pressure around the major.

Technical levels to watch

On a sustained weakness below 1.2150 level, leading to a subsequent break below session low support near 1.2135 level, now seems to turn the pair vulnerable to once again break below 1.2100 handle and head towards testing 1.2080-75 support area.

Meanwhile on the upside, a fresh leg of up-move back above 1.2200 handle might now lift the pair beyond session peak resistance near 1.2230 level towards 1.2250 hurdle, en-route 1.2270-75 resistance area.

1 Week
Avg Forecast 1.2179
  • 23% Bullish
  • 69% Bearish
  • 8% Sideways
Bias Bearish
1 Month
Avg Forecast 1.2123
  • 20% Bullish
  • 73% Bearish
  • 7% Sideways
Bias Bearish
1 Quarter
Avg Forecast 1.2089
  • 9% Bullish
  • 55% Bearish
  • 36% Sideways
Bias Bearish