- Dollar rises sharply after US inflation data for August.
- GBP/USD erases multi-session gains in minutes.
GBP/USD pulled back sharply after the US inflation data pushed the dollar higher across the market. The pair went from trading at weekly highs at 1.1735 to fall as low as 1.1530, the lowest level since Friday.
The pair remains near the lows in a context of dollar strength. The Consumer Price Index showed a year-on-year rise of 8.3%, above the 8.1% expected.
The report helped settle the Basis for Expectations of an Aggressive Federal Reserve for the next meetings. The key event will be next week and a rise of 75 basis points is expected for said meeting. The decision will be known on Wednesday.
Next week will also be the turn of the Bank of England’s decision, after being postponed for a week due to the death of Queen Elizabeth II. A rise in the reference interest rate is also expected here.
GBP/USD sharp retracement priced back below 1.1610 (average of 20 in four hours). Should the declines extend, next support is seen at 1.1515 and then 1.1455. A return above 1.1640 would ease downward pressures, while breaking above 1.1670 would expect a test of current week’s highs of 1.1735/40.
Technical levels
Source: Fx Street
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