- The pound surged on Tuesday amid dollar weakness.
- US consumer price data for October indicated a further slowdown in inflation.
- Many analysts believe that the Fed’s interest rates have peaked.
The GBP/USD price analysis indicates a bullish tone as the British pound maintains its position near the recent highs achieved on Tuesday. However, the recent UK CPI data showed a decline to 5.7% against the expected 5.8% and previous 6.1%. Though the price retraced a bit, the uptrend remains intact.
The pound surged on Tuesday amid dollar weakness as US consumer price data for October indicated a further slowdown in inflation. Consequently, there is a high likelihood that the Federal Reserve has concluded its interest rate hikes.
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US consumer prices held steady last month due to lower gasoline prices, following a 0.4% increase in September. The report’s release led to an immediate decline in the dollar and a sharp drop in Treasury yields. Meanwhile, the benchmark 10-year yield fell below 4.5%.
John Doyle from Monex USA in Washington, predicted a continued dollar weakening through the end of the year, possibly into early January. The market welcomed the data. Moreover, many analysts believe that the Fed’s interest rates have peaked.
Meanwhile, futures indicate a more than 68% probability the Fed will cut interest rates by 25bps or more by next May.
In the UK, data revealed that workers’ wages grew less rapidly in the three months to September. Still, they remained near their record pace. However, these figures are unlikely to reduce the Bank of England’s concerns about inflationary pressures. Moreover, they did not alter market-based forecasts for a UK rate cut in June 2024 at the earliest.
GBP/USD key events today
The US will release several major economic reports, including:
- Retail sales
- Core retail sales
- The Producer Price Index report.
GBP/USD technical price analysis: Bullish momentum surges to new highs.
On the technical side, the pound has rallied to new heights, breaking above key resistance levels. The steep surge saw the price break above the 1.2300 and the 1.2401 resistance levels. Currently, bulls have paused below the 1.2501 resistance level.
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Moreover, the strong surge has left the 30-SMA well below the price. Therefore, it might lead to a pause or pullback as the SMA catches up. At the same time, the RSI is deeply overbought, showing that bullish momentum has hit extreme levels. It might allow bears to come in for a retracement to the 1.2401 support level before the uptrend continues.
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Source: https://www.forexcrunch.com/gbp-usd-price-analysis-pound-holds-gains-after-us-inflation/
