GBP/USD sticking to recent highs ahead of UK CPI reading

Pound buyers are enjoying some Brexit relief as PM May and the EU's Michel Barnier appear set to begin working together towards a solution.
UK inflation data due early Wednesday could derail buying opportunities.

Joshua Gibson FXStreet

The GBP/USD is testing into 1.3150 after slipping away from the current week's highs, but remains close by as improving Brexit sentiment bolsters the Sterling ahead of Wednesday's UK CPI reading.

Stiff-nosed Eurosceptics within Britain's Tory party are seeing Prime Minister Theresa May break significant ground in talks with the EU, with Brussels' head Brexit negotiator and PM May taking turns announcing that they are willing to reach fair middle ground in talks in order to avert a disorderly Brexit, and calls by the hardline Brexiteers to vote down any trade agreement that PM My secures with the EU, regardless of content, are largely being ignored for now as Pound traders experience some much-needed relief on Brexit headlines after months of stonewalling and unmoving negotiations.

Wednesday also features some potentially hard-hitting data, with the UK's inflation reading hitting at 08:30 GMT. The CPI for the year into August is expected to tick down slightly from 2.5% to 2.4%, and GBP bulls will be hoping for a showing that at least hits expectations in order to keep the GBP/USD in a decidedly long-sided stance heading into the latter half of the week.

GBP/USD levels to watch

The Sterling-Dollar matchup heads into Wednesday's London market session clattering into the week's highs, and as FXStreet's own Valeria Bednarik noted earlier: "(the GBP/USD) retains its bullish short-term stance according to technical readings in the 4 hours chart, as it continues developing above a firmly bullish 20 SMA. In the mentioned chart, the Momentum maintains its bullish slope above its 100 level, while the RSI is pulling back from overbought levels, not enough to suggest the current decline is poised to continue. The high of the day is critical, as the pair has there the 50% retracement of the 2016/18 rally, and a break above it should result in a steeper advance, particularly if supported by UK inflation data. Below 1.3120, on the other hand, the pair could correct lower, but bears won't take over unless 1.3045 gives up."

Support levels: 1.3120 1.3090 1.3045

Resistance levels: 1.3170 1.3210 1.3240

Author

Joshua Gibson

FXStreet

Joshua joins the FXStreet team as an Economics and Finance double major from Vancouver Island University with twelve years' experience as an independent trader focusing on technical analysis.

AUD/USD edges higher above 0.7050 as hot CPI lifts RBA rate hike odds

The AUD/USD pair gathers strength to near 0.7055 during the Asian trading hours on Thursday. The Australian Dollar edges higher against the US Dollar as hotter inflation data bolsters expectations of Reserve Bank of Australia rate hikes. The US September Personal Consumption Expenditures inflation report will be in the spotlight later on Thursday.

USD/JPY retakes 158.00 as USD stalls the post-FOMC corrective slide

USD/JPY attracts some dip-buyers during the Asian session on Thursday, climbing back above 158.00 as the US Dollar reverses part of the post-FOMC pullback from a two-week high. Bulls, however, await key US macro data – the Advance Q3 GDP and the PCE Price Index – before positioning for further gains. Focus will then shift to the crucial BoJ policy update on Friday amid firming expectations for a December rate hike.

Gold weakens below $4,050 amid renewed USD buying ahead of crucial US data

Gold slides back below $4,050 during the Asian session on Thursday, snapping a three-day winning streak. The US Dollar regains positive traction after Wednesday’s post-FOMC corrective slide as elevated energy prices keep December rate-hike bets firmly on the table. Moreover, geopolitical risks underpin the safe-haven buck, weighing on bullion as traders now look to crucial US data – the Advance Q3 GDP and the PCE Price Index.

Bitcoin volatility falls to 2023 lows, Glassnode says

Bitcoin climbed above $81,000 on Wednesday as the Federal Reserve (Fed) kept interest rates unchanged at 3.75%–4.00% in a 10–2 vote. The decision came as the top crypto's realized volatility fell to levels last seen in the summer of 2023.

Fed's recap: A cautious hold with a clear warning on inflation

The Federal Reserve (Fed) held its policy rate steady at 3.75%-4.00%, but it wasn’t a unanimous decision. Among two officials who wanted a 25-basis-point hike were Lisa Cook and Beth Hammack, while Chair Kevin Warsh said the Fed would use the coming flow of information to decide whether further action is needed. The statement presented a resilient economy.

Anthropic pledged $270 billion to Amazon, Google, and Microsoft. Here's who actually gets paid

Anthropic owes Amazon, Google, and Microsoft at least $269.4 billion for computing power, even if it uses less. All three sell its models and handle its billing, and Amazon and Google own stakes and lend it money, so they get paid regardless of how the IPO goes. The Dario Amodei-led Anthropic filed its initial public offering (IPO) on Monday, seeking a listing on the Nasdaq under the ticker ANT.