- GBP / USD makes a modest rebound from weekly lows hit early Wednesday.
- Warmer-than-expected UK CPI figures continue to support the positive intraday move.
- A modest rally in US bond yields supports the dollar and limits the pair’s gains.
The pair GBP / USD maintains its daily gains around the 1.3820-25 region after the release of the latest UK CPI report, although it lacks any follow-up buying.
The pair showed some resilience below the 1.3800 level on Wednesday and made a modest rebound from support marked by the lower bound of an uptrend channel extending from August lows. The rally has allowed the GBP / USD pair curb the previous day’s sharp retracement decline from the 1.3910-15 region, or the highest level since August 6 reached in reaction to the softer US CPI report.
GBP / USD Maintains Modest Intraday Gains after the release of UK consumer inflation figures stronger than expected. In fact, the headline CPI accelerated 0.7% in August from the 0.5% forecast. The annual inflation rate also exceeded market expectations and up 3.2% during the reported month from 2% in July.
The positive data, however, has done little to impress the pair’s bulls or provide any significant boost to GBP / USD amid a modest US dollar strength. Despite signs of easing inflationary pressure, Investors seem convinced the Fed could begin reversing its pandemic-era stimulus later this year. This, along with the rally in US Treasury yields, supported the USD.
Therefore, it will be wise to wait for some strong continuation buying before positioning for any further bullish movement in the GBP / USD pair. Investors are now expecting the US economic calendar, with the Empire State Manufacturing Index releases, industrial production and capacity utilization for some boost in GBP / USD at the start of the American session.
GBP / USD technical levels