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GBP / USD declines from highs, still well offered around the 1.3820-25 zone

  • GBP / USD regained positive traction on Wednesday and reversed losses overnight.
  • The UK CPI report, better than expected, lifted the British pound amid widespread dollar weakness.
  • Reports that British Prime Minister Johnson will reshuffle his cabinet topped the bright side, for now.

The pair GBP/USD it maintained its offered tone throughout the middle of the European session, although it has retraced a few pips from the daily highs and was last seen trading in the 1.3820-25 zone.

Having shown some resistance below the round figure of 1.3800, the GBP / USD pair attracted some buying on Wednesday and halted the sharp retracement of the previous day from the highest level since August 8. The British pound was based on higher than expected UK consumer inflation figures. This, coupled with the renewed weakness of the US dollar, provided an additional boost to the important one.

The USD struggled to capitalize on the previous day’s late bounce from post-US IPC swing lows, instead finding new offers amid reduced bets for an immediate Fed downside move. This was evident by a softer tone around US Treasury yields, which, along with underlying bullish sentiment, undermined demand for the safe-haven dollar.

The rally allowed GBP / USD to reverse losses overnight, although it lacked a bullish conviction amid reports that UK Prime Minister Boris Johnson will reshuffle his cabinet later in the day. Therefore, it will be prudent to wait for some subsequent purchases before traders start to position themselves for a further short-term appreciation move.

Traders are now looking forward to the US economic record, which features data from the Empire State Manufacturing Index, industrial production and the capacity utilization rate. This, coupled with US bond yields and broader market risk sentiment, could influence USD price dynamics and produce some short-term trading opportunities around the GBP / USD pair.

Technical levels

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