[[-graph]] GBP/USD has made quite a reversal since the end of September when it traded below 1.04, but it is struggling to extend gains above the 50 SMA (yellow) on the daily chart, as shown below. There is an immediate resistance around 1.2250 which is where the 50 SMA was staying yesterday.

Buyers pushed above the 50 SMA yesterday during the European session but found selling pressure in the US session which pushed the price back below this moving average, which stands as resistance. This moving average rejected the price in early December, but buyers are back at it pretty fast after last week’s pin candlestick, which is a bullish signal.

GBP/USD Weekly Chart – Buyers Retesting the 50 SMA

The 50 SMA is acting as resistance 

GBP/USD made some decent gains for the second straight week of 2023, as sellers keep dumping the USD on less hawkish FED expectations. Tomorrow, the US CPI consumer inflation is expected to cool off by 2 points, from 10.7% to 10.5%, but that’s still too high compared to the US where CPI inflation fell to 6.5% in December.

Besides that, the BOE governor Andrew Bailey has failed to provide any updates on the actual thinking at the Bank of England regarding rate hikes, while we’re hearing dovish comments from the FED. Chief Economist Pill sounded downbeat on inflation, saying that domestic factors could make inflation more persistent even if gas and oil prices decline. Markets are pricing in a 40bps hike at the next BOE meeting on February 2nd.

Although, before tomorrow’s inflation report, we had the UK employment and earnings report today.

GBP/USD Live Chart