GBP/USD sticks to UK CPI-led strong gains to monthly highs

Haresh Menghani FXStreet

The GBP/USD pair stalled UK CPI-led strong up-surge near 1.2475 resistance, marking 61.8% Fibonacci retracement level of 1.2706-1.2109 recent downslide, and retreated few pips from monthly highs.

Currently trading around mid-1.2400s, the pair regained fresh traction on Tuesday after the UK headline inflation, as measured by CPI, rose to its highest level in nearly 3-1/2 year and came-in at an annualized pace of 2.3% for February.

The reading was well above previous month's 1.8% and also surpassed BoE's target of 2.0%, with investors pricing-in possibilities of BoE interest rate hike, sooner than the markets have been anticipating.

However, the BoE Governor Mark Carney comments on the latest inflation print, that market should not over react to one data point, collaborated towards capping further up-move for the major, albeit has failed to convince the markets and prompt any immediate profit taking slide.

Meanwhile, an unexpected drop in the US current account deficit, at $112.4 billion for Q4 as compared to $116 billion in Q3 and $128.2 billion expected, did little to provide any respite for the US Dollar bulls.

US: The current-account deficit decreased to 2.4% of GDP

With today's economic data out of the way, traders now turn their focus to speeches from Kansas City Fed's Esther George and Cleveland Fed's Loretta Mester for fresh impetus.

Technical levels to watch

Momentum above 1.2475-80 resistance is likely to lift the pair beyond the 1.2500 psychological mark towards 1.2525 intermediate resistance ahead of an important horizontal hurdle near 1.2555-60 area.

On the downside, any profit taking slide now seems to find support at 100-day SMA near 1.2410-1.2400 region, below which the corrective move could get extended towards 1.2360-55 support ahead of 1.2335-30 strong support, marking 38.2% Fibonacci retracement level.

	TREND INDEX	OB/OS INDEX	VOLATILY INDEX
15M	Slightly Bullish	Overbought	High
1H	Bearish	Neutral	High
4H	Bullish	Neutral	Shrinking
1D	Strongly Bearish	Oversold	Low
1W	Bullish	Neutral	Low
Updated Mar 21, 10:15 GMT

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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