GBP/USD eroded nearly 140-pips from session tops and now keeps falling as the latest Brexit polls continue to drive the GPB moves. At the time of writing, the cable slumps -0.90% to fresh session lows of 1.4140 levels.
Ivan Delgado, Chief Editor at FXStreet noted, “Earlier today, ICM published its latest findings, showing a 6 point lead for the 'Leave' camp, with 'Leave' scoring 53, while 'Remain' stood at 47%. Following ICM polls, ORB was next, revealing much tighter results, with 48% for 'Remain' and 49% for 'Leave'. Lastly, YouGov showed Leave 46%, Remain 39%.”
All eyes now remain on the much-awaited UK inflation report, which is due to be published at 8.30GMT.
Bulls need a better CPI print for fresh breath of life
The UK consumer prices are expected to have risen 0.4% in May y/y, after slipping to 0.3% a month before. While core figures, excluding volatile food and fuel costs, are also seen rising to 1.3% after the 1.2% rate booked in March.
A better CPI report, showing an uptick in prices last month, could rescue the GBP bulls somewhat from the ongoing Brexit woes-driven sell-off in the cable. However, the reaction could be more like a knee-jerk one, as the data may have temporary impact on the rate, amid dominant Brexit theme this week.
Contrarily, a weaker-than-expected headline and core CPI print could see the UK gilt yields fall further and therefore, add to the sustained weakness in GBP, knocking-off GBP/USD back towards 1.4100-1.4050 levels.
GBP/USD Technical Levels
Haresh Menghani, Analyst at FXStreet notes, “Looking at the broader picture, despite of its sustained move above 100-day SMA, the pair is reversing from 50% Fibonacci retracement level of 1.5659-1.3836 down-leg and has now dropped back below 100-day SMA and 23.6% Fibonacci retracement level support. Hence, a follow through selling pressure below 1.4100 level now is likely to continue exerting pressure in the near-term.
On the upside, 23.6% Fibonacci retracement level near 1.4255-60 area now seems to act as immediate resistance. Any strength beyond this immediate resistance is likely to be utilized as an opportunity to initiate fresh short positions, thus capping any further appreciation around 100-day SMA support turned resistance near 1.4350 region.”
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