- GBP/USD is almost flat, unable to capitalize on US dollar weakness.
- Powell’s speech did not provide any forward-looking guidance for the February 1 FOMC meeting.
- GBP/USD Price Analysis: In the short term, it could test the 200-day SMA.
The British pound (GBP) has been unable to sustain earlier gains against the US dollar (USD) and increased selling pressure has dragged down the GBP/USD down after hitting a daily high at 1.2178. Upbeat market sentiment, reflected in US stock indices, has failed to boost sterling. At time of writing, GBP/USD is trading at 1.2145, slightly below its opening price.
GBP/USD prepares for December US CPI report
Wall Street has opened with solid gains after US Federal Reserve Chairman Jerome Powell’s speech on Tuesday provided no forward-looking guidance. However, according to Rabobank Analysts, “the president was nonetheless able to squeeze in reference to the Fed prioritize inflation over employment in the short termwhen he said that the case for the independence of monetary policy lies in the benefits of insulating monetary policy decisions from short-term political considerations.”
Investors shrugged off Powell’s words and US stock markets closed higher on Tuesday. In the meantime, GBP/USD failed to gain traction even as the dollar continued to weaken. The DXY Dollar Index, which measures the value of the dollar against a basket of major currencies, lost 0.08% to 103,193.
The absence of economic data releases in the UK keeps traders awaiting the release of the US Consumer Price Index (CPI) on Thursday. Estimates for headline inflation are 0% month-on-month; in annual terms, a drop to 6.5% is expected. Stripping out volatile elements, core CPI is forecast to be 0.3%m/m, while on a yearly basis it is estimated to be 5.7%.
GBP/USD Price Analysis: Technical Perspective
GBP/USD price action over the past three days has formed a bullish harami candlestick pattern, which suggests that the sellers are coming in. But it must be said that the 200 day EMA in 1.2107 it would be hard to break for sellers. However, if broken, it could open the door for a retest of GBP/USD in 1.2100followed by a test to the 20 day EMA at 1.2080.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
