• GBP/USD climbs around this week’s tops 1.3670’s area, on broad US dollar selling pressure.
  • Inflationary pressures threaten to derail the economic recovery.
  • UK GDP for August increased by 6.9%, better than expected.
  • US CPI rose to 5.4%, the highest gain since 2008.

During the New York session, the British pound advances almost half percent, trading at 1.3651 at the time of writing. The market sentiment is mixed, as US equity indexes seesaw between gains and losses. 

Higher US inflation September reading than estimated, coupled with slower growth, threatens to derail the economic recovery. Furthermore, an ongoing energy crunch in Asia and Europe spurred the perception in consumers that companies with higher electricity prices could pass on those costs to them without harming the business.

US Consumer Price Index at higher readings since 2008, overshadowed the UK GDP figure

The UK economic docket featured the Gross Domestic Product for August annually, which rose by 6.9%, two ticks higher than the 6.7% estimated by economists. Despite being a positive figure, investors’ focus was on the United States Consumer Price Index. The GBP/USD barely blinked on the news.

Meanwhile, on the US front, the Consumer Price Index rose by 5.4%, more than the  5.3% YoY reading expected by analysts. The reading is the highest annual gain since 2008. The Core Consumer Price Index, which excludes food and energy, increases by 4% annually, according to estimations. The GBP/USD initial reaction was to the downside, reaching 1.3587, but bounced off the lows and printed a daily high around 1.3646, at the time being.

GBP/USD Price Forecast: Technical outlook

Daily chart

The GBP/USD is approaching the top of the week around 1.3670’s area. However, the daily moving averages (DMA’s) are still above the spot price, maintaining the downtrend on the pair. Also, the momentum indicator like the Relative Strenght Index (RSI) at 49 broke below the 50-midline, suggesting that downward pressure is mounting on the GBP/USD pair.

Failure to break above the 1.3700 figure could tumble the pair towards 1.3411, but it would find some hurdles on the way down. The first support level would be the October 12 low at 1.3567, followed by the September 28 low at 1.3520, and then the September 29 low at 1.3411.

KEY ADDITIONAL LEVELS TO WATCH

GBP/USD

Overview
Today last price 1.3651
Today Daily Change 0.0063
Today Daily Change % 0.46
Today daily open 1.3588
 
Trends
Daily SMA20 1.3632
Daily SMA50 1.3731
Daily SMA100 1.3834
Daily SMA200 1.3844
 
Levels
Previous Daily High 1.3638
Previous Daily Low 1.3568
Previous Weekly High 1.3659
Previous Weekly Low 1.3532
Previous Monthly High 1.3913
Previous Monthly Low 1.3412
Daily Fibonacci 38.2% 1.3595
Daily Fibonacci 61.8% 1.3611
Daily Pivot Point S1 1.3559
Daily Pivot Point S2 1.3529
Daily Pivot Point S3 1.349
Daily Pivot Point R1 1.3628
Daily Pivot Point R2 1.3667
Daily Pivot Point R3 1.3697

 

 

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