GBP/USD side-lined below 1.3120 ahead of UK CPI, Carney’s speech

  • Will the recovery sustain?
  • Higher Treasury yields cap the recovery.
  • UK CPI, BOE Carney’s and Yellen’s speech in the spotlight.

The GBP/USD pair extends its side-trend into early Europe, consolidating the recovery below 1.3130 levels, as we progress towards the UK CPI release and BOE Governor Carney’s speech.

GBP/USD capped by 10-DMA at 1.3131

The recovery in GBP/USD from one-week lows of 1.3062 lost legs at 1.3135 levels in the US last session, after Treasury yields, rallied across the curve on hopes of a Dec rate hike, which offered the much-needed support to the USD bulls. The 10-year Treasury yields jumped back above 2.40%, while the USD index rebounded to 94.50 levels.

The spot is seen fluctuating between gains and losses in early trades, as markets gear up for the key UK CPI data, followed by the speeches from the BOE Governor Carney and Fed Chair Yellen, which could provide fresh direction on the prices.

Recall that the pound was hammered across the board yesterday day before, in the wake of the weekend news piece published by The Times that reported on 40 members of the PM's Conservative party signing a letter of no confidence in Theresa May's leadership.

GBP/USD Technical View

Jim Langlands at FX Charts, writes: “On the topside, resistance will be seen at 1.3135 and at 1.3180/85, where a chart gap now needs to be filled. Back above 1.3200 would find good offers at around 1.3230 although I don’t see it up here today unless the CPI is very strong. On the downside, support will be seen at 1.3060 ahead of 1.3025 and then at 1.3000.”

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