GBP/USD sellers attack 1.3800 on firmer USD, UK Inflation eyed


  • GBP/USD dropped the most in a week after refreshing five-week high, edges lower of late.
  • UK Claimant Count Change eases lesser than expected, Unemployment Rate matches forecast.
  • US CPI m/m drops the most since January, US dollar rallied as tapering fears grew firmer.
  • BOE hawks seek firmer inflation after mixed jobs report, risk catalysts are important too.

GBP/USD bears take a breather around 1.3800 to kick-start Wednesday’s Asian session following a volatile day that refreshed monthly high, before marking the heaviest daily fall in five weeks.

The cable cheered the broad US dollar weakness ahead of the US Consumer Price Index (CPI) data before the market’s rush to risk-safety bolstered the greenback. It’s worth noting that the quote fails to respond much to the latest UK employment figures.

UK job numbers came in mixed with the Unemployment Rate matching the expected weakness to 4.6% during the three months to July versus 4.7% prior. However, the Claimant Count Change came in a bit higher than the forecast of -71.7K to -58.6K in August versus -7.8K previous readouts. Further, Average Earnings Excluding Bonus matched the softer forecast of 6.8% for 3M/yr July period but inched above 8.2% market consensus of 8.2% to 8.3%, compared to 8.8% prior, while including the bonus component.

On the other hand, the US CPI dropped the most since January on monthly basis to 0.3% versus 0.4% expected and 0.5% prior. The CPI ex Food & Energy also dropped below 0.3% expected and previous readings to 0.1% during August, marking the biggest fall in six months.

As the UK employment figures aren’t so sour, hawks among the Bank of England (BOE) policymakers have got a chance to reiterate the bullish bias as the British government is up for booster shots and one vaccine dose to 12-15-year-olds, not to forget easing travel rules for winter. Even so, fears of a third covid wave in the UK and another lockdown challenge the GBP/USD bulls as the death toll rose to 185 while the daily infections eased to 26,628.

Elsewhere, Brexit drama stretches as Britain delays full post-Brexit border checks from the European Union (EU). “The UK is to delay introducing post-Brexit checks on food and farming imports to England, Scotland and Wales, blaming Covid disruption and pressure on global supply chains,” said the BBC. Fears of the EU-UK tussles also escalate after the “BOE Governor Andrew Bailey issued a fresh broadside over the European Union’s post-Brexit plans on clearinghouses, warning any upheaval risked a “real threat” to financial stability,” per Bloomberg.

It’s worth noting that the sour sentiment in the market, recently backed by the Fed tapering concerns weighs on equities and underpin the US dollar’s safe-haven demand, adding weakness to the GBP/USD prices ahead of the key inflation data.

Hence, today’s UK CPI data will be important to watch given the latest chatters over the winding up of the Quantitative Easing (QE) by the BOE’s Husher, also previously backed by the other policymakers. That said, the headline CPI is likely to jump from 2.0% to 2.9% YoY and may help the BOE hawks to reiterate their bullish bias, which in turn could favor the GBP/USD prices in recovering the latest losses.

Technical analysis

Having reversed from 100-DMA, near 1.3915, GBP/USD sellers aim for a three-week-old rising support line near 1.3765.

Additional important levels

Overview
Today last price 1.3806
Today Daily Change -0.0034
Today Daily Change % -0.25%
Today daily open 1.384
 
Trends
Daily SMA20 1.3767
Daily SMA50 1.3807
Daily SMA100 1.3917
Daily SMA200 1.3827
 
Levels
Previous Daily High 1.3851
Previous Daily Low 1.3797
Previous Weekly High 1.3889
Previous Weekly Low 1.3726
Previous Monthly High 1.3958
Previous Monthly Low 1.3602
Daily Fibonacci 38.2% 1.3831
Daily Fibonacci 61.8% 1.3818
Daily Pivot Point S1 1.3808
Daily Pivot Point S2 1.3776
Daily Pivot Point S3 1.3754
Daily Pivot Point R1 1.3862
Daily Pivot Point R2 1.3884
Daily Pivot Point R3 1.3916

 

 

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

Latest Forex News


Latest Forex News

Editors’ Picks

EUR/USD holds above 1.1700 but the upside is limited

The EUR/USD pair flirted with 1.1750 but was unable to retain its modest intraday gains. Now trading in the 1.1720 price zone, bears retain control ahead of the US central bank monetary policy decision.

EUR/USD News

GBP/USD: Pressure mounts ahead of central banks’ announcements

The Fed and the BoE will make announcements this week. UK public inflation expectations are up for this year and the upcoming ones. GBP/USD is technically bearish in the near term, poised to retest August monthly low.

GBP/USD News

Gold: Further advances depend on the Fed

A better market mood put pressure on the American currency. The US Federal Reserve will announce its monetary policy decision on Wednesday. Gold advanced for a second day in a row, but additional gains are in doubt.

Gold News

Shiba Inu bulls can't hold SHIB from dropping to $0.000006

Shiba Inu price has fallen -28% over the past four trading sessions. Bears remain in control as bulls fail to complete a breakout above $0.000008. Bulls must hold $0.000007 to prevent a drop towards $0.000006.

Read more

Fed Preview: Three ways in which Powell could down the dollar, and none is the dot-plot

No taper now, but when? That is the main question for the Fed in its all-important September meeting. The bank buys $120B worth of bonds every month and it is set to reduce the pace at some point – the first step toward raising interest rates. 

Read more

Forex MAJORS

Cryptocurrencies

Signatures