GBP/USD Bounces Off Support After Consumer Inflation Numbers
Cable has been under pressure since it reversed at around 1.3150 by the middle of July, falling to 1.26 lows, which means losing more than 500 pips. Although sellers found solid support at the 100 SMA (green) on the daily chart and the price formed a doji candlestick above it, which is a bearish reversing signal. The price showed some bullish signs yesterday and today looks like it will close bullish, with the price trading t 1.2750.
This pair is up 0.5%, while EUR/GBP has also slipped 0.3% to 0.8560 on the day currently. It points to decent albeit light gains for the pound after the UK consumer inflation numbers which were released earlier. So, where does GBP/USD go from here?
For starters, the technicals haven’t really changed too much, since the main trend is still bearish. Although if buyers push the price above the 50 SMA (yellow) then the decline will be put into question and the larger bullish trend will be back into play. So, we are following the price action to see if the 50 SMA ill be broken.
UK July CPI Inflation Released by ONS – 16 August 2023
- July CPI YoY +6.8% vs +6.8% expected
- June CPI YoY was +7.9%
- Core CPI YoY +6.9% vs +6.8% expected
- Prior core CPI YoY was +6.9%
The headline reading is as per expected, reflecting the big decline in household energy bills in the month of July. But it is all about the core reading, and that is keeping more stubborn and unchanged at 6.9% – similar to June. Looking at the breakdown, food price inflation is also seen cooling further with the year-on-year reading there falling to 14.9% (previously 17.4%). But services inflation remains stubborn and is up from 6.3% in June to 6.5% in July.
I don’t see this as providing a meaningful lift for the pound as once again, it all but serves to reaffirm a 25 bps rate hike next month – which is already 100% priced in. And with peak rates seen at 5.91% coming into the data, there’s not much room to price beyond 6% at this stage.
GBP/USD Live Chart
ABOUT THE AUTHOR
See More
Sidebar rates
Related Posts
Save
Join 350 000+ traders receiving Free Trading Signals
Alerts
Rates
Calendar
Signals